Environment Canada

Environment Canada

June 10, 2009 13:00 ET

Environment Canada: Offset System a Step Towards a Carbon Market in Canada

OTTAWA, ONTARIO--(Marketwire - June 10, 2009) - Canada's Environment Minister, Jim Prentice, today announced that the Government is taking an important step towards setting up a carbon market in Canada by moving forward with its Offset System for Greenhouse Gases.

"The Offset System is an important part of Canada's efforts to reduce greenhouse gases" said Minister Prentice. "This system is one of several steps we are taking as we finalize our domestic regulatory framework for greenhouse gas emissions, and marks a major milestone as we move towards establishing a carbon market in Canada."

The Offset System will establish tradable credits and encourage cost-effective domestic greenhouse gas reductions in areas that will not be covered by planned federal greenhouse gas regulations, like the forestry and agricultural sectors. For example, potential offset projects could include methane capture and destruction from landfill gas, the creation of new forests, or agricultural soil management.

Companies subject to the greenhouse gas emissions regulations will be able to purchase offset credits on the carbon market and use these credits for compliance with their regulated targets. In addition, other parties, such as small businesses, individuals and travellers, will be able to acquire and use these credits to voluntarily offset the greenhouse gas emissions from their activities.

The two draft guides that will be published in the Canada Gazette on June 12 propose rules and guidance on the requirements and processes used to generate offset credits and to verify the eligible greenhouse gas reductions achieved from a registered project. Interested parties will have 60 days to comment on these guidance documents.

The release of these two draft guides follows the publication of the first draft guide in August 2008, which proposed the rules and guidance to quantify greenhouse gas reductions for projects in Canada's Offset System. The final versions of all three Offset System guides are expected to be published in the fall of 2009 after all comments have been reviewed.

More information about Canada's Offset System is available on Environment Canada's Web site at: www.ec.gc.ca/creditscompensatoires-offsets


BACKGROUNDER

CANADA'S OFFSET SYSTEM FOR GREENHOUSE GASES

Under Canada's Offset System for Greenhouse Gases, the Government of Canada will issue credits for greenhouse gas emission reductions and removals from activities or sectors that are not covered by planned federal regulations of greenhouse gas emissions. To be eligible to receive offset credits, projects must be within the scope of the Offset System, and must achieve real, incremental, quantifiable, verifiable and unique reductions of greenhouse gases.

Potential projects that could qualify for offset credits include methane capture and destruction from landfill gas, afforestation and other forestry projects, agricultural soil management and wind energy.

For example, farmers using reduced or no-till farming methods which help store carbon in their fields could be eligible to receive offset credits for the amount of carbon stored. Likewise, operators of landfill sites could install equipment to capture and combust the methane gas coming from the landfill, and would be eligible to receive offset credits if the site meets the other eligibility requirements. Similarly, a wind turbine could be eligible to receive offset credits for the emissions avoided from the displaced electricity. A list of potential projects can be found in Table 1 below.

There are five steps required to generate offset credits from a project:

1) Creation of a quantification protocol for the project type;

2) Registration of the project;

3) Implementation of the registered project and monitoring of data;

4) Reporting and verification of reductions from the registered project;

5) Certification of reductions and issuance of offset credits by Environment Canada.

Once an offset credit is generated by an eligible project, it can be traded on the carbon market, banked or used for compliance purposes. These credits could be sold directly to companies subject to federal greenhouse gas regulations, allowing them to meet their required reductions. Other parties (e.g. small businesses, individuals, travellers) will be able to acquire and use these credits to voluntarily offset greenhouse gas emissions from their activities.

For example, a no-till farming project could benefit from the offset system as below:



A farmer in The farmer A company in The farmer
Alberta then receives 5 Quebec receives
generates 5 credits from purchases 5 payment
tonnes of CO2 - the Offset - credits from - equivalent to
reductions with System the farmer to current market
his registered satisfy federal value of
offset project greenhouse gas carbon credits
regulations


The Government of Canada has developed three guidance documents which set out the program rules, eligibility requirements and applications processes. These three documents provide guidance on the rules for the system in three areas:

- quantifying reductions from a project;

- generating credits, and;

- verifying reductions.

The first of these three draft guidance documents, Canada's Offset System for Greenhouse Gases: Guide for Protocol Developers, was published in Canada Gazette, Part I in August 2008 and proposed the rules and guidance on the requirements and processes to quantify the greenhouse gas reductions for projects in Canada's Offset System.

The two draft guides that will be published in the Canada Gazette on June 12 are Canada's Offset System for Greenhouse Gases: Program Rules and Guidance for Project Proponents and Canada's Offset System for Greenhouse Gases: Program Rules for Verification and Guidance for Verification Bodies. These guides propose the rules and guidance on the requirements and processes to create offset credits, from the registration of the project to the issuance of offset credits; and on the requirements and processes to verify the eligible greenhouse gas reductions achieved from a registered Offset Project.

These two documents will be published in the Canada Gazette, Part I for a 60-day public comment period. Consideration will be given to comments received and the final versions of all three guidance documents published in the fall.

As we finalize the offset system, we will explore approaches to harmonize the federal and various provincial offset systems, with an objective to ensure that carbon trading markets can function efficiently.

For more information on the Offset System, please visit www.ec.gc.ca/creditscompensatoires-offsets



Table 1: List of potential offset projects
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Project-type Potential Activities
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Afforestation - creation of a forest where none has existed since
at least 1990
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Landfill Gas Capture - capture and destruction of methane from landfill
and Combustion sites
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Reduced or no-tillage - reduction in the amount of tillage on farmland
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Wind - generation of electricity from wind energy
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Contact Information

  • Office of the Minister of the Environment
    Frederic Baril
    Press Secretary
    819-997-1441
    or
    Environment Canada
    Media Relations
    819-934-8008
    1-888-908-8008
    www.ec.gc.ca