Canadian Manufacturing

Feds announce next step in creation of domestic carbon offset to further support clean growth

While the Federal Greenhouse Gas Offset System will be enabled through regulation, participation in the program is fully voluntary

March 8, 2021  by CM Staff

Federal Greenhouse Gas Offset System – Proposed Regulations (CNW Group/Environment and Climate Change Canada)

GATINEAU, Que. — The Minister of Environment and Climate Change, the Honourable Jonathan Wilkinson, announced draft regulations to establish the Federal Greenhouse Gas Offset System to reduce carbon emissions and create jobs.

“The Federal Greenhouse Gas Offset System is another tool we’re using to combat climate change and create a cleaner, healthier future,” said Wilkinson, in a prepared statement. “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.”

The Federal Greenhouse Gas Offset System is a market-based approach that will spur innovation and private-sector investment in economic activities that lead to further emissions reductions.

The system will support a domestic carbon trading market under Canada’s carbon price for industry – the Output-Based Pricing System (OBPS) – under which regulated facilities who exceed their emission limits can provide compensation by purchasing federal offset credits – an additional lower-cost option – generated from activities not already incentivized by carbon pollution pricing.

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Once established, the Federal Greenhouse Gas Offset System will stimulate demand for projects across Canada that reduce greenhouse gases and generate federal offset credits. The ability to generate and sell federal offset credits creates opportunities for farmers, foresters, Indigenous communities, municipalities, and other project developers to earn revenues from greenhouse-gas reductions and removals.

Protocols for high priority project types are currently under development in parallel to the regulation to give industries additional lower-cost compliance options. For example, under the Landfill Methane Management Protocol, which is currently under development, a municipality could install technology to collect methane that would otherwise be emitted into the atmosphere. The municipality could earn federal offset credits, which it could sell to industrial facilities regulated under the Output-Based Pricing System.

While the Federal Greenhouse Gas Offset System will be enabled through regulation, participation in the program is fully voluntary.