On June 8, 2022, the federal authorities launched Canada’s Greenhouse Fuel Offset Credit score System (Credit score System) in an effort to fulfill Canada’s emissions discount targets.1 The Credit score System creates market-based incentives for municipalities, Indigenous communities, trade gamers, and people to implement revolutionary options to cut back Greenhouse Fuel (GHG) emissions and take away GHG from the ambiance.
The Credit score System is ruled by the Canadian Greenhouse Fuel Offset Credit score System Rules, SOR/2022-111 (Rules), created beneath the Greenhouse Fuel Air pollution Pricing Act, SC 2018, c 12 (GGPPA).2 The Credit score System was designed and created in alignment with the Pan-Canadian Greenhouse Fuel Offsets Framework, which includes expertise and experience from Alberta, British Columbia, and Québec, who’ve already launched their very own offset credit score methods.3
At the moment, solely provinces which don’t have already got a carbon pricing system that meets or exceeds federal necessities are topic to the GGPPA and the Credit score System. For instance in Alberta, the TIER Act and rules govern as a substitute. Beneath the Rules, individuals to the Credit score System have to be registered and comply with a federal protocol setting out how GHG emissions reductions or GHG removing from the ambiance are measured. Such reductions and removals should additionally come from actions which aren’t in any other case obligated by regulation or falling beneath an present carbon pricing system. Generated offset credit are tradeable and sellable in the marketplace.
The primary federal protocol which permits for era of offset credit is the brand new Landfill Methane Restoration and Destruction protocol.4 Beneath it, landfill operators who recuperate landfill fuel and subsequently destroy or put it to use are eligible to obtain offset credit. Extra protocols relevant to the refrigeration, agricultural, and forest administration sectors are presently beneath growth. A protocol for Direct Air Carbon Seize and Sequestration applied sciences can even come within the close to future.
The minimal value of offset credit in Canada, and thus of carbon emission, is dictated by the Pan-Canadian Strategy to Pricing Carbon Air pollution (Federal Benchmark), most just lately up to date in August 2021.5 The Federal Benchmark units the offset credit score value at CA$65 per tonne CO2e in 2023, and can rise by CA$15 per 12 months to CA$170 per tonne CO2e in 2030, when it is going to be up to date once more. Bought credit can be utilized to fulfill compliance obligations beneath the federal Output-Primarily based Pricing System.
With these initiatives, the federal authorities hopes to stimulate non-public sector funding in applied sciences and initiatives which promote decarbonization, and incentivizes present amenities to enhance their carbon footprint.
