Alberta has filed criminal charges against a carbon offset company for the first time. Here’s why they may not be the last
For the first time ever, a Canadian province has filed criminal charges against a company for providing false information about carbon offsets, a spokesman for Alberta’s Department of the Environment said. millions of dollars per year.
Carbon offsets are bought and sold under a trading system where governments put a price on carbon dioxide emissions to force companies to fight climate change.
Since 2007, Alberta has had a mandatory carbon offset system for major emitters, such as oil and gas companies, landfills and food processors. If they produce more carbon dioxide than they are allocated, they must buy credits to offset those emissions. The credits are generated by companies that reduce emissions, for example by building wind farms or installing solar panels. To ensure accuracy, the credits are verified by external auditors. The lawsuit in Alberta centers on the role of one of these third-party verifiers.
With Alberta and Canada betting big on carbon offsets as a tool to tackle global warming, the criminal case highlights the difficulties of verifying whether emissions reductions are legitimate.
“These are the first indictments in the courts related to the Emissions Management and Climate Resilience Act,” Tom McMillan, Alberta Environment and Protected Areas communications director, said of Alberta’s carbon trading system, which he says is the longest running in North America. .
In 2020 alone, major emitters in Alberta earned $548 million in compliance payments under Alberta’s offset rules, McMillan said.
He noted that the federal government and other provinces are basing their carbon trading systems on Alberta’s approach, meaning the legal action will have repercussions far beyond the oil-rich province.
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According to Janetta McKenzie, acting director of the oil and gas team at the Pembina Institute, a nonprofit research group focused on clean energy, there doesn’t appear to be much fraud or irregularities in Alberta’s carbon offset trading system.
“But it’s critical that those systems produce good data, that we track those offsets, and that they’re complementary and verifiable,” she said.
Since carbon markets are “very complex” and “a bit opaque,” having transparent practices for verifying offsets is crucial to mitigating climate change, said McKenzie, who broadly supports the strategy.
25 charges filed
Alberta’s Department of Environment and Protected Areas filed 25 charges against Amberg Corp., an environmental service provider, and Olga Kiiker for non-compliance with environmental laws. according to a June 23 statement.
The charges, filed in the Court of Justice of Alberta in Calgary, include providing false information, providing functions of a third-party insurer without required qualifications, and violating other rules related to auditing and verification of carbon offsets, according to court documents.
The next court date has been set for July 19, according to the court a statement from the Alberta Department of the Environment. None of the allegations have been proven in court.
Amberg did not respond to calls for comment. The company’s website is no longer working and emails to executives are being bounced.
The company offers verification services similar to an accounting firm reviewing a company’s financial statements, but for carbon emissions.
Simply put, if a company claims it has created 10 tons of carbon offsets, say by building a wind farm or reducing fertilizer use on farms, someone needs to verify that that offset is legitimate and can be sold on the wider market.
Those auditors play a critical role in the carbon offset regulatory system to ensure that “credit generation is right,” McMillan said.
Debates on compensation effectiveness
If a verification company produces fraudulent or inaccurate emissions reduction data, as the county claims Amberg has done, then the entire carbon trading system is undermined.
Currently, the price of a ton of carbon dioxide in Alberta is $65. That will more than double to $170 per ton by 2030, as part of an agreement between the province and the federal government.
Proponents of carbon offsets believe that companies are more likely to adopt conservation measures or new technologies to reduce their pollution if a price is put on emissions.
According to the World Meteorological Organization, El Niño is approaching. The naturally occurring phenomenon collides with an already warming planet and could help make 2023 the hottest year on record, meteorologists say.
Critics say carbon trading makes consumers and businesses feel like they’re making a difference, but does little to actually address global warming.
Canadian jurisdictions have several carbon trading systems, including Alberta’s mandatory reduction compliance system, voluntary carbon offsets — such as when a person purchases carbon credits after taking a long-haul flight — and a carbon trading system involving Quebec and California.
A federal offset system was launched last year, a spokesman for Environment and Climate Change Canada said, and the first offset credits are likely to become available in 2024.
Calls for market surveillance
Graham Gilchrist works on the front line of carbon offset trading. Based in Leduc, Alta, he is an agronomist, an expert in the science of soil management and crop production, advising farmers on how to reduce emissions to generate carbon credits they can sell.
For example, he works with ranchers to vary what they feed their cows. Different diets of bovines could lead to fewer cow burps, Gilchrist said, meaning they release less climate-changing methane gas over their lifetime.
An intensive data project at Olds College is using a unique setup to measure soil gases in fields with varying levels of fertilizer in the hope that farmers can reduce their carbon footprint without reducing crops.
His non-profit organization, Biological Carbon Canada, has another project that is changing the way fertilizers are applied so that more of the nitrogen farmers use in fields goes directly into the soil, rather than into the atmosphere, contributing. to climate change.
Farmers who implement these projects and have them verified as scientifically sound by an independent third-party auditor can generate carbon offsets that are then sold to major polluters. Ideally, this puts money back into the pockets of rural residents and reduces overall pollution in the process.
Gilchrist estimates that farmers in Alberta have received about $180 million since 2007 for selling allowances to intermediaries, known as aggregators, who then sell them to industrial polluters.
The charges against Amberg, a company responsible for verifying the legitimacy of carbon credits, highlight a broader problem in Canada’s carbon trading systems, Gilchrist said.
While he doesn’t like the idea of more “red tape” for farmers, the agronomist wants a federal regulator to be responsible for ensuring the quality of offsets rather than leaving it to outside auditors.
Ideally, this would mean national standardization, so buying a credit for one ton of carbon anywhere in the country would come with a “made in Canada” stamp, showing that emissions reductions have been properly vetted.
Authorities in Alberta, normally skittish about federal regulation of the energy sector, seem to support that perspective.
“As the federal government and other jurisdictions implement regulations and programs that require third-party assurance, they will also need to provide [oversight] to ensure that those guarantees can be relied upon,” said Alberta Environment’s McMillan.
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