Canada released draft regulations on Friday detailing how projects that reduce or remove greenhouse gas (GHG) emissions can earn tradable credits, a major part of the government’s climate plan as it aims to cut carbon emissions.
Canada, which is the world’s fourth-largest oil producer and one of the highest greenhouse gas emitters on a per capita basis, has committed to reducing its climate-warming GHG emissions to 30% lower than 2005 levels by 2030, and is targeting net-zero emissions by 2050.
The new Federal GHG Offset System is designed to boost a domestic carbon trading market under Canada’s carbon price for industry, known as the Output-Based Pricing System. Projects that generate credits can sell them to industrial facilities – such as cement works or refineries – that exceed their emissions limits.
Environment Minister Jonathan Wilkinson said the system will create opportunities for farmers, foresters, indigenous communities, and municipalities, among others, to earn revenues from projects that reduce or remove GHG emissions.
Ottawa also hopes it will spur innovation and private-sector investment in emissions-reducing technology, and allow Canadian industry to remain competitive by lowering the cost of carbon credits.
“This system will encourage cost-effective emissions reductions right here in Canada and create new economic opportunities, particularly in the forestry, agriculture, and waste sectors,” Wilkinson said in a statement.
Each offset credit will be equivalent to one tonne of carbon dioxide equivalent removed or reduced. The price will be set by buyers and sellers in the open market, with the federal carbon tax expected to act as a price ceiling.
Last year Prime Minister Justin Trudeau’s Liberal government unveiled a plan to steadily ramp up its price on carbon to C$170 ($134.32) a ton by 2030. 29dk2902l