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GUELPH — The city has come across $1 million in found money.
Mayor Karen Farbridge earlier this month signed an agreement to voluntarily sell carbon credits to the Greening Canada Fund, which purchased them on behalf of TD Bank and Bank of Montreal, two corporations which will use the credits to offset their carbon footprints in an effort to become carbon neutral.
Detailed terms of the deal weren’t released by either the city or the Greening Canada Fund, which is managed by Green Power Action. But both parties said the city will receive five annual instalments worth an estimated $1 million total.
How much money the city actually receives “really depends on how many credits we sell them each year. They let us know how many credits we need to supply them at the beginning of each year,” said Bill Shields, the city’s solid waste resources supervisor of governance and compliance.
The city obtained the credits by capturing methane gas from the Eastview landfill site and converting it into enough electricity to power an estimated 1,000 homes.
Methane gas is 20 times more powerful than carbon dioxide.
The city will likely use the money to upgrade technology at the Eastview landfill site.
“We haven’t exactly decided yet,” Shields answered when asked where the money will be spent. “But certainly the Eastview site is currently experiencing technical problems. So we’ll use some of the money to fix that.
“We’re just not getting the amount of gas we once thought we would be able to get.”
Shields said the more gas that’s captured, the more electricity is created. And that means more carbon credits earned and sold.
Carbon trading isn’t a regulated industry or compliance market in North America. U.S. lawmakers are currently grappling with exactly how to curb carbon emissions — a cap and trade method is an option, as is a national energy tax.
Without a regulated market or exchange — such as the proposed Chicago Climate Exchange — the measuring, pricing, buying and selling of carbon credits in North America is subjective.
“It’s a bit of an opaque market,” said Gerry Rocchi, CEO of Green Power Action and manager of the Greening Canada Fund. “In the absence of a compliance market, most carbon credits are selling for less than $10 per ton.”
University of Guelph environmental economist Ross McKitrick said even in a regulated cap and trade market, such as one that exists in Europe, the price for carbon credits “fluctuates from pennies to upwards of 30 euros.”
McKitrick called the voluntary deal between the city and banks “a symbolic gesture.”
“There’s no legal requirement to purchase credits of this kind,” McKitrick said. “It’s free money for the city. It’s really just a public relations gesture (by the banks).”
“The nature of the fund is aimed at the small but growing good corporate citizens who seek to reduce their own carbon footprint,” said Canada Greening Fund spokesperson Brian Smith.
McKitrick lauded the efforts of the banks and city but said carbon trading alone doesn’t do nearly enough to curb carbon dioxide emissions.
“If you look for something you can measure in terms of a thermometer, this is too small to show up,” McKitrick said. “If you’re hoping to demonstrate carbon trading can be done, good citizens can accomplish that.”
But McKitrick said much more stringent methods need to be in place in order to reduce emissions. And that costs money.
“Anything we can afford to do to reduce emissions is nibbling at the edges,” McKitrick said. “Carbon dioxide is very expensive to control. The only way to do that is to scale back fossil fuel consumption. And there’s no government in the world that thinks they’re prepared to bite that bullet.”
HOW IT WORKS
• City captures and uses methane gas to produce electricity
Engineers quantify tonnage of gas captured
City receives “carbon credits” for the gas captured in tons
City registers credits with carbon registry Coolaction.com
All carbon credits are given a serial number
Greening Canada Fund buys registered credits on behalf of investors TD Bank and Bank of Montreal
Banks “retire” or “cancel” the credits, which cannot be resold or reused, to offset carbon emissions created through flights, travel or other means