Canada unveiled on Wednesday its first federal carbon market, enabling governments, businesses and other organizations to offset their carbon dioxide emissions by purchasing credits.
The launch of the new scheme, however, was not welcomed by climate activists who argue that the trading price would be too low for industries to keep emitting carbon dioxide into the atmosphere.
Although British Columbia, Quebec, and Alberta already have regional compliance credit systems, there was no national one until today. The new federal system is thus critical to Canada’s goal of cutting emissions by 45% by 2030 and achieving net zero emissions by 2050, said Steven Guilbeault, the country’s Environment Minister.
“Climate change is the crisis that will persist,”he remarked. “That’s why we can’t pause and must continue to go faster and further.”
The new system is aimed at large industrial emitters, but any company in Canada can purchase offset credits from it.
For the time being, the new compliance market will only allow municipalities who install new methane capture devices at landfills to sell carbon credits. Over the next year, the government plans to complete the standards to include initiatives that reduce emissions from refrigeration systems, forests, and farm soil management.
The government also stated that it is now developing guidelines to add direct air capture technology, which removes carbon dioxide from the atmosphere and keeps it underground.
For every tonne of carbon dioxide reduced by approved projects, one credit will be created. To avoid double counting, these credits will only be counted once they have been audited to ensure that they are not being compelled to conform with existing legislation or carbon price. The reduction must also be permanent, and they will be documented on a public registry.
Under Canada’s current carbon pricing scheme, firms have to pay a carbon tax of 50 Canadian dollars for every tonne of carbon dioxide emitted into the atmosphere. Nonetheless, the credits are expected to cost 10% to 20% less than the carbon price.
Louise Comeau, the Conservation Council of New Brunswick’s head of climate change and energy solution, criticized that lowering the cost by enabling emitters to purchase credits for less than the carbon price will only reduce their financial incentive to reduce their own emissions.