Grant recipients have failed to assess emissions so the environmental benefit can’t be measured
Alberta’s auditor general says the province’s bioenergy grant programs are flawed.
Alberta Energy spent approximately $200 million on biorefining and infrastructure grants between 2006 and 2012. The funds were doled out to 109 renewable bioenergy projects, including biofuel plants.
Merwan Saher audited the programs in 2008 and determined that insufficient information was gathered from grant applicants and recipients to determine whether the money was being properly spent on projects that would reduce carbon dioxide emissions and help the province meet its climate change goals.
The latest audit released July 9 indicates there hasn’t been much im-provement on that front.
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“While the department had taken initial steps to make improvements, we found that it had not implemented our recommendation,” Saher said in the report.
“The department did not enforce its requirement for grant recipients to estimate greenhouse gas emission reductions from their projects.”
Jason Hale, energy critic for the Wildrose opposition party, said the report highlights many of the concerns he has about the programs.
“It shows how the department of energy and the current government is mismanaging the biofuel grants that they’ve been giving out,” he said.
Hale’s concerns extend beyond faulty emissions reduction reporting. He said grant recipients are failing to show how they are spending taxpayer dollars.
A number of companies that received grant money haven’t built their proposed biofuel plants.
“That’s a huge concern because we’re giving out taxpayer dollars, but we’re not holding these companies accountable for how they are spending them,” said Hale.
There is a requirement that any money that wasn’t spent be returned to the government.
“Has any of that money been returned? We’re waiting to see the reports,” he said.
Kimberly Budd, public affairs officer for Alberta Energy, said the department is reviewing all grant agreements to see if the funds were spent appropriately.
It is also addressing the concerns raised by the auditor general.
Saher said the province didn’t consider factors such as indirect land use when estimating emissions reductions from funded projects. As well, it relied on assumptions rather than actual emissions data.
He said the department failed to specify the method that project owners should use to calculate lifestyle emissions, define environmental benefits and differentiate between the feedstocks that were used to create biofuel and bioenergy.
“Without an assessment of the environmental impact of these projects, the department cannot know if the projects contribute to Alberta’s climate change strategy,” Saher said.
“The environmental costs of some projects may exceed their benefit.”
He has recommended that Alberta Energy clarify guidelines for annual reporting by grant recipients to properly assess emissions.
Alberta’s biorefinery and infrastructure grant programs ended March 31, 2011, so it’s too late to do anything about those grants. However, the government extended the producer credit program to March 2016, which was the focus of Saher’s latest recommendations.
He said Alberta Energy should require producer credit grant program recipients to demonstrate their product’s positive environmental impact relative to comparable non-renewable energy products.
Budd said the change has already been implemented for a program that will distribute an estimated $98 million between April 1, 2013, and March 31, 2014.
Thirty of the 31 companies participating in the producer credit program had submitted greenhouse gas reports for 2011 and 2012 as of July 8. The department is following up with the one company that hasn’t submitted a report.
“We haven’t gone through and evaluated whether or not the greenhouse gas emissions from the biofuels is a savings over the conventional fuel, but that work is being done right now by an accounting firm,” said Budd.
“It is expected that the audit will find (biofuel) is making a difference in emissions.”
Budd said the reporting requirements were strengthened after the first auditor general’s report and that all contracts signed after 2011 incorporate those strengthened reporting requirements.
Hale said it’s a step in the right direction, but the process needs to be more transparent.
“When are we going to see their evaluation of these reports? How long is it going to sit in the minister’s office?”
Budd said the department expects the results from its analysis will be made available this fall.
