1 PacificCarbonTrust.com 11 BC’s Carbon Neutral Government and the Auditor General’s Report –...

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PacificCarbonTrust.com

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BC’s Carbon Neutral Government and the Auditor General’s Report – An

Update

For Public Sector Organizations

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Future directionQ&A

CNG Update

Path forward

Context Putting CNG and the OAG report into context

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Update on CNGOverview of OAG report

Objectives for the webinar

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Carbon neutrality demonstrates leadership, putting government’s house in order as we ask businesses, communities and individuals to also take climate action.

It is also a systematic approach that helps transition the public sector to a future in which less energy – or less energy per unit of output – is used.

Through carbon neutrality we continue to support new jobs through investment in energy efficiency and carbon offset projects and we engage nearly two million people who work, learn or visit public sector buildings daily.

Carbon Neutral Government is about leadership

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Carbon Neutral Government Process

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MeasureWhat is measured

is managed

PlanDetermining the

best route for the most reductions

ReduceEnergy Use will

reduce over time

OffsetInvesting in GHG

reduction projects positions BC as a

leader in clean tech & support jobs

across B.C.

ReportEngaging the

public transparently

Management Review

Top management review of system

The Carbon Neutral Government Process mimics the ISO14001 Environmental Management System Process

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First jurisdiction in North America to achieve carbon neutrality across the public sector – two years running

Provincial government, schools, universities ,colleges and hospitals

300,000 public servants and 2 million British Columbians who work, learn in, or visit public sector facilities.

Carbon Neutral Public Sector

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Energy Efficiency - University Hospital of Northern BC (Prince George) Funding received:

• $1.6 million (provincial)-2010• $79,000 (partners)

Expected emission reductions: 837 tonnes/yr Estimate $65,000 savings (fuel alone) Plus $46,000 ($30 c tax and $25 offset/tonne/yr)

Success stories across the public sector

LEED Gold – Royal Jubilee Hospital , Victoria Largest LEED Gold Hospital in Canada

Cut the Carbon web tool capturing behavioural actions report out in 2012/13 – VCHA, FHA, PHSA, Providence

Energy and Environmental Stewardship Award Interior Health Authority

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GHG projects do more than just simply reduce emissions. Projects have also resulted in:

Increased biodiversity protection along the coast

New uses for wood waste in the lumber industry

Opportunities for municipalities to take on green projects

New BC regulations for using greener cements in buildings

Supporting First Nations environmental stewardship

Benefits beyond emission reductions

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Carbon Sequestration

Improved Forest Management, Conservation

TimberwestGreat Bear Rainforest

2012 BC Portfolio – ~ 24 offset projects

Photo credit: Gregg Paterson

Energy efficiency, fuel switching , clean tech

Various industries

Northeast and Mainland/Southwest

Energy efficiency, fuel switching

Pulp and Paper Mills, BC Tissue Mill, MainlandAgriculture, LMBuildings, LM

Community Landfill Methane

Fraser Ft George, PGCSRD, Salmon Arm

http://www.pacificcarbontrust.com/our-projects/offset-showcase/clean-tech-biomass-gasification-kruger-products-new-westminster/

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PacificCarbonTrust.comOffset portfolio objectives – broadening and deepening

Economic

Environmental

Social

Strategic

All projects that PCT invests in will be EOR compliant and demonstrate value for money.

Portfolio objective would be to achieve a balance of projects that demonstrate value in all 4 areas.

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Scope was limited…

Covered B.C.’s first year (2010) as a carbon neutral government and two of the first offsets purchased by Pacific Carbon Trust.

Audit did not reflect the changes made to B.C.’s offset system as the market has matured in 2011 and 2012.

Situating the Auditor General’s Report

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1. Has government established reasonable procedures to allow public sector organizations to determine their GHG emissions and assessed whether they have taken sufficient actions to reduce those emissions?

2. Has PCT purchased credible offsets?3. Is government evaluating and reporting on the achievement

of its objectives?

OAG concluded that the provincial government had not met its objective of achieving a carbon neutral public scetor (in 2010).

Audit questions and conclusion

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Government accepts the recommendations in the report, but rejects the conclusion that carbon neutrality was not achieved in 2010.

– B.C.’s carbon offset system is based on international standards. Every offset in Pacific Carbon Trust’s portfolio has been twice audited by third-party experts, has passed those audits and has fully met the requirements of B.C.’s Emission Offsets Regulation.

The B.C. Government is actively moving forward on the Auditor General’s recommendations and has already accomplished significant improvements in several areas during the past year while the audit was underway.

B.C. was the first carbon neutral government – now we want to be the best.

Government’s Response

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1. The Climate Action Secretariat work with public sector organizations to ensure each is pursuing reasonable actions to minimize emissions. As part of this, government should consider establishing public sector emission reduction targets.

2. The Climate Action Secretariat ensure supplementary guidance to the Emission Offsets Regulation be finalized and adhered to.

3. The PCT, to better manage offsets purchase risk, ensure that the results of its due diligence are satisfactorily analysed, concluded and documented.

4. The Climate Action Secretariat provide stronger oversight to ensure that offsets purchased on behalf of government are credible.

5. The PCT provide greater transparency about the cost effectiveness of its purchases.

6. The Climate Action Secretariat and the Pacific Carbon Trust ensure that reporting on carbon neutrality assess the trade-offs between minimizing government emissions and offsetting those emissions through the purchase of offsets.

The bottom line – 6 recommendations

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Recommendation #1:

The Climate Action Secretariat work with public sector organizations to ensure each is pursuing reasonable actions to minimize emissions. As part of this, government should consider establishing public sector emission reduction targets.

Response:

• The Climate Action Secretariat will take greater efforts to promote emission reductions across the public sector.

• As we report on BC’s Carbon Neutral Government commitment over time, we will assess whether emission reductions are broadly in line with BC’s provincial greenhouse gas reduction targets to ensure government’s achieving appropriate results.

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Recommendation #2:

The Climate Action Secretariat ensure supplementary guidance to the Emission Offsets Regulation be finalized and adhered to.

Response:

• The Climate Action Secretariat will review guidance provided to date with the Pacific Carbon Trust and the professional community and formalize the guidance and procedures for offsets.

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Recommendation #3:

The PCT, to better manage offsets purchase risk, should ensure that the results of its due diligence are satisfactorily analysed, concluded and documented.

Response:

• In support of this recommendation, Pacific Carbon Trust will continue to work with Deloitte & Touche and other industry experts to implement continuous improvement. Deloitte has provided a follow-up performance review to assess PCT’s implementation of previous recommendations and to suggest further areas for improvement.

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Recommendation #4:

The Climate Action Secretariat provide stronger oversight to ensure that offsets purchased on behalf of government are credible.

Response:

• Climate Action Secretariat will consult with the professional community and international experts and release formal procedures on how the Director’s oversight role will be delivered.

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Recommendation #5:

The PCT provide greater transparency about the cost effectiveness of its purchases.

Response:

• On February 15, 2013, the Pacific Carbon Trust released a pricing framework for each of the three project types in its portfolio. This will help guide potential offset project developers as they build financing for their projects.

• The carbon market has sufficiently matured to allow for more transparent financial reporting and a clear pricing structure ensures that releasing these details will not create any potential financial risk to B.C. taxpayers.

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Recommendation #6:

The Climate Action Secretariat and the Pacific Carbon Trust ensure that reporting on carbon neutrality assess the trade-offs between minimizing government emissions and offsetting those emissions through the purchase of offsets.

Response:

• In support of this recommendation, Government will take further actions to communicate the value of reducing public sector emissions as well as investing in emission reductions across BC.

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Continually improve Carbon Neutral Government program delivery and support for the public sector

Increase the focus on helping public sector organizations to further reduce their GHG emissions

Leverage learning from the public sector to help create a ripple effect in the BC economy as a whole

Accelerate understanding across BC of the scale of the climate challenge and the need for action

Increase individual and collective capacity to take action

Where to from here?

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Moving forward: Emission Reductions in the Public Sector

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Why focus on emission reductions in the public sector?

• In 2011, the public sector emitted 864,040 tonnes, 78.5% were from buildings and 12% from transportation.

• Buildings and transportation are nearly 2/3s of BC’s emissions.

• = big opportunity for a transformative impact.

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Increased emphasis on major projects

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Emissions reductions through major PSO infrastructure projects, procurement or policies that also demonstrate the success and tools for broader, transformative action as well as chart a new course for capital planning that responds to the risks posed by climate change.

A client-focused business service to help major projects save time and money, minimize risk, and maximize certainty as they integrate energy efficiency, emission reduction or cleantech aspects into their project design and construction.

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Our measures of success

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Increase the greenhouse gas and energy savings for every public dollar invested, thereby lowering the cost per tonne of reductions.

Improve PSOs’ capital planning to consistently account for climate risks, building PSOs understanding of the business case for technologies that reduce emissions or adapt to a changing climate, including valuing longer-term capital expenditures in exchange for a reduction of future operating budgets.

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Barriers we want to tackle – 1

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Forecasting our future carbon liability:

Failure to do this can lead PSOs to underestimate future financial liability and choose lower cost solutions during construction and capital allocation that could result in higher long term operating costs.

Government has accounting, budget, capital and CNG guidance. Carbon liability guidance needs to get built into these in a rigorous, systematic way.

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Barriers we want to tackle – 2

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Bridging capital costs with operating savings.

Even when the business case reduces government’s costs, it is not clear that the “right” decision is made.

We want to work with Treasury Board and capital planning groups across the public sector to ensure that a climate/GHG reduction lens is brought to budget decisions – and that a portion of capital budgets explicitly target energy system upgrades that reduce operating costs and GHG emissions.

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The eight accelerators that guide our work

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The processes that will ultimately enable the CNG program to flourish

1 PacificCarbonTrust.com 11 BC’s Carbon Neutral Government and the Auditor General’s Report –...

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