The investigation that could scuttle FortisBC's climate plan

BC’s gas utility is facing regulatory scrutiny over its accounting practices for the environmental credits it uses to claim some of its natural gas sales are carbon-neutral, "renewable” and reduce emissions.

If the province’s utilities commission decides the accounting system FortisBC uses for the credits is not rigorous enough, the company could be forced to reduce the overall amount of gas it sells so it can meet BC's climate goals. Under the province's climate plan, 15 per cent of  the natural gas sold in the province must be considered "renewable" by 2030. 

So-called "renewable" natural gas is chemically identical to natural gas, but instead of being extracted from fossil deposits, it is captured from landfills, food waste and manure pits. It is considered renewable because it is created from methane — a potent greenhouse gas emitted naturally when organic matter breaks down.

Since 2011, FortisBC's climate-conscious customers have been given the option of paying more for "renewable," gas and last July, the company announced at least one per cent of all the gas it delivered would be "renewable," with that proportion rising over time. 

But BC doesn't produce anywhere near enough biomethane to meet current needs, let alone future demand. To fill the gap, FortisBC buys credits for the so-called "environmental attributes" of biomethane produced outside the province, including in the US, and calls the gas flowing through its pipes "renewable."

Only about 15 per cent of the gas labelled and sold as biomethane by FortisBC comes from BC. Most of the remainder is fossil gas which FortisBC labels “renewable” because the company buys environmental credits from companies that produce renewable gas, mainly in the US. 

Critics say the system lacks enough oversight to ensure the "environmental attributes" aren't being counted twice and have slammed the practice as greenwashing.

"We're concerned that FortisBC is using the presence of a very small amount of renewable natural gas in the gas that they delivered to consumers in BC to justify the continued expansion of the fossil gas business," said Sunil Singal, climate campaigner with Stand.Earth, which sued FortisBC over its "renewable" natural gas claims last year. The organization has also complained to the BC Utilities Commission (BCUC) about FortisBC's emissions-reduction accounting methods.

Now, the commission — which regulates FortisBC — has jumped into the fray. In June, it announced that it is investigating whether FortisBC is doing enough to make sure the credits or "environmental attributes" it buys from outside the province actually reduce emissions.

"If those offsets aren't real, then what we will have is higher emissions than we would otherwise have," said Kathryn Harrison, a political science professor at the University of British Columbia. 

The utilities commission's investigation was prompted by gaps in the accountability reports that FortisBC is required to submit, according to its announcement of the inquiry. When the commission first approved FortisBC's request to use credits as a key part of generating renewable natural gas, it required the company to obtain a signed letter from each project selling credits to ensure the biomethane's environmental gains weren't being double-counted. 

However, in practice, FortisBC admitted it doesn't always receive certificates which act as a safeguard against double-counting. Moreover, the utilities commission's inquiry found some of the paperwork Fortis provided shows it is buying “renewable” natural gas credits from the same pool being used to meet local climate rules. For example, if local or federal laws force a biomethane producer like a landfill to capture a certain amount of the biomethane it generates, it can only sell "environmental attribute" credits for biomethane it produces beyond that threshold.  

Stand.Earth also filed a complaint with the commission that highlights the lack of a regulated accounting system that can ensure the validity of environmental credits that works across provincial and international borders, making it difficult to know if FortisBC's renewable natural gas program is actually reducing emissions. 

Those accounting gaps and the Stand.Earth complaint pushed the commission to scrutinize FortisBC more closely to ensure it isn't double-counting credits.

"It's about making a more transparent system…which has the proper oversight and accounting so that you don't double count emissions," said Kate Harland, research lead — mitigation at the Canadian Climate Institute. She is not involved in the commission's decision-making process. "We want to make sure that those emission savings are true savings." 

In a statement, FortisBC said it is participating in the inquiry and its "acquisitions of [renewable natural gas]...are all reviewed and approved by the BCUC.  FortisBC meets the BCUC’s existing compliance requirements related to its purchase and sale of [renewable natural gas], and will continue to do so with respect to any new compliance requirements arising from the inquiry." 

The inquiry comes against a pitched battle over the future of natural gas use in Canada. Recent years have seen a suite of cities ban use of the fuel for heating in new buildings in an effort to reduce urban emissions. In response, the natural gas industry launched a powerful PR campaign to fight off the new rules. 

Replacing fossil natural gas with "renewable" natural gas is a central part of this campaign. In BC, FortisBC has also tried to use its renewable natural gas as a way to skirt municipal bans on fossil natural gas bans in new buildings in an effort to protect its business. 

Electricity is the cleanest and more cost-effective way to heat buildings. Natural gas, including renewable natural gas, should be used only for specific industrial applications with unique energy demands. Ensuring that gas is actually renewable is essential, said Harland. 

"The main message is to make sure that BC customers, who are paying for the renewable natural gas credit, are paying for something which results in real emission reductions," she said.