Canada introduces 2030 Emissions Reduction Plan and Offset Credit Regulations

Environment and Climate Change Canada (ECCC) has published the Greenhouse Gas Offset Credit System Regulations, the legally binding framework of Canada’s first national carbon offset system and a step towards addressing the federal government’s emission reduction goals, outlined in the 2030 Emissions Reduction Plan.

We recently wrote about the development of the 2030 Emissions Plan and a federal carbon offset system on February 28, 2022. This alert serves to update yuo on more recent developments.

On March 29, 2022, the Government of Canada (GOC) released the 2030 Emissions Reduction Plan. The 2030 Plan is the first version of a series of plans that the GOC will pass as directed by the 2021 Canadian Net-Zero Emissions Accountability Act. In accordance with the requirements of the Act, the federal government is required to provide updated emissions reductions plans in the milestone years of 2030, 2035, 2040, and 2045, the ultimate goal being to cut Canadian emissions to 40 percent below 2005 levels by 2050. ECCC unveils framework regulations for Canada’s first national carbon offset system

The Greenhouse Gas Offset Credit System Regulations, released by the ECCC on June 8, 2022, seek to incentivize voluntary emissions reductions and to support a domestic carbon offset trading market. Credits generated within the federal system may be sold to entities with existing compliance obligations, or to address voluntary climate commitments.

Subject to certain exceptions, credits in the federal system may be earned from activities that are not otherwise covered by protocols within current provincial carbon systems and are included in the Compendium of Federal Offset Protocols. The Compendium is a list of the eligible protocols under the federal system for which projects may earn credits. This deference to existing provincial protocols reflects the intention for the federal system to work in conjunction with established provincial regimes.

Generally, the Regulations describe the conditions for project registration as ‎well as the circumstances under which a registration can be ‎cancelled, proponent requirements, the issuance of offset credits, and the requirements for keeping and retaining records.

To be registered within the system, a project must aim to generate GHG reductions by preventing GHG emissions or removing GHGs from the atmosphere and produce reductions that are real, additional, quantified, verified, unique and permanent. Reductions are considered “additional” if they would not have been generated in absence of the project, were not required by law or the result of a legal requirement, are not from sources subject to federal or provincial pricing mechanisms for GHG emissions and are not credited under another offset program or another GHG reduction mechanism.

What’s next: Continued protocol development and Indigenous inclusion

To date, the only published Compendium protocol is for Landfill Methane Recovery and Destruction; however, additional protocols are being developed under these headings: Reducing Greenhouse Gas Emissions from Refrigeration Systems, Improved Forest Management, Enhanced Soil Organic Carbon, and Livestock Feed Management.

ECCC also recently announced that it will develop a Direct Air Carbon Capture and Sequestration (CCS) protocol and is currently accepting individual submissions for placement on the Roster of Technical Experts, from which teams will be formed to support protocol development. Individuals with expertise in the CCS field are encouraged to submit their candidacy by July 31, 2022.

In addition, ECCC is developing a paper to provide information on ECCC’s initiatives to date as well as additional proposed measures to facilitate the participation of Indigenous peoples in the federal offset system, with comments on all aspects of the paper open until June 30, 2022.

DLA Piper’s Commodities group is experienced in helping to assess companies’ GHG reduction and documentation systems, as well on advising on new developments as the Canadian federal government continues to develop these protocols. 

Learn more by contacting us at DLAPiperCommodities@dlapiper.com with any questions and/or comments about this Commodities Alert.