Fraction of Nova Scotia's Green Fund spent on climate change programs: auditor

Only a fraction of a Nova Scotia government fund established to combat climate change has been spent on solving the problem, the province's auditor general revealed in an audit released Tuesday.

Kim Adair said a performance audit of the Green Fund, established in 2019, found almost $74 million was transferred out of the fund over its first two years of operation, but only $11.9 million was spent on climate change programs.

The bulk of the money — about $60 million — was left sitting in "program partner" bank accounts, Adair said. Virtually all of that cash was sent to two independent, non-profit agencies: EfficiencyOne and the Clean Foundation.

Adair's report says it remains unclear why the Department of Environment and Climate Change handed millions of dollars to non-government parties before the money was needed to deliver Green Fund initiatives.

"We weren't given a good reason or rationale for doing that," Adair told a news conference Tuesday. "I liken it to this example: If you were going to build a house and you have a contract with the builder, would you give the builder 100 per cent of the funds to build that house before he even starts?"

Timeline questioned

The report says the two agencies were selected by the department to deliver its programs "based on prior relationships."

Adair said both agencies reported required information to the Environment Department, but she said the department was not reviewing that data to ensure targets were met.

"The practice of dispersing all Green Fund money within the year to multi-year programs increases the risk that funds may not be used for their intended purpose," Adair said. "It also reduces the government's flexibility to redirect funds to other targeted areas."

But EfficiencyOne spokesperson Janet Tobin suggested there was no danger the money being held by the agency would be used for anything other than its intended purpose.

"The funding that we receive through contracts with the Green Fund, EfficiencyOne's contracts clearly state the intended purpose," said Tobin. "We have every intention of of following through on all of the commitments within that contract and the contracts are there to protect the public interest."

"And I think the AG's report today, you know, stated that we are upholding all of the tenants of our contracts."

She said even the interest earned by EfficiencyOne, because of the prepayments, would be reinvested in the three programs it is running on the province's behalf.

According to Tobin, $19.1 million remains in the bank from the province's initial investment of $46.7 million.

The Green Fund was set up to collect revenue from Nova Scotia's cap-and-trade program, which allowed companies to emit greenhouse gases so long as they purchased emissions allowances. Another $52 million was collected in the 2021-22 fiscal year, but that money was not part of the audit.

Last fall, the Nova Scotia government tabled legislation for a new emissions-reduction plan that would replace its cap-and-trade system.

"That happened after our audit period," Adair said. "It remains to be seen (what will happen). There's no clear lines of expectations as to what this spending is supposed to do to achieve those goals. That's now part of the plan they will be looking at."

The auditor general's report includes six recommendations for change, all of which should be considered as the government shifts to a modified Nova Scotia Climate Change Fund that is tied to the new emissions-reduction plan, Adair said.

Province accepts recommendations

In response, the government issued a statement Tuesday saying it had already accepted all of Adair's recommendations.

Environment and Climate Change Minister Timothy Halman said the changes will "improve the monitoring, reporting, procurement and administration of our funding programs and strengthen and improve the transparency of our work."

The province has set a goal to reduce greenhouse gas emissions by at least 53 per cent below 2005 levels by 2030, and to be net-zero by 2050.

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