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Take Credit with Canada’s Greenhouse Gas Offset Credit Regulation

March 10, 2023

On June 8, 2022, the Canadian Government enacted the Canadian Greenhouse Gas Offset Credit System Regulations which enables certain federal projects to generate and sell carbon credits. The goal of the program is to incentivize reduction in greenhouse gas emissions.

Once a project is eligible to participate in the program, credits are generated when the project either prevents greenhouses gases from being emitted or removes greenhouses gases beyond normal business practices and legal requirements. For every tonne of CO2 equivalent reduced, a project is awarded one offset credit. Companies regulated by the federal Output-Based Pricing System (OBPS) can use then these credits to meet their compliance obligations and reduce their cost of compliance.

The period in which a project can generate offset credits depends on the nature of the project, and unless otherwise set out in the applicable protocol, is:

  • 30 years for a forestry-related sequestration project;
  • 20 years for a non-forestry-related sequestration project; and
  • 10 years for all other projects.

The crediting periods of projects can also be renewed under the regulation.

This initiative by the federal government is likely to create economic opportunities for organizations in sectors such as forestry, agriculture, and waste, while incentivizing and encouraging innovation and investment towards reducing greenhouse gases and carbon footprints.

This post was co-authored by Nicola Virk, and articling student Eric Mo.

Want to keep up to date on similar topics? Contact Richard Bereti ([email protected]) or Nicola Virk ([email protected]).

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Important Notice: The information contained in this Article is intended for general information purposes only and does not create a lawyer-client relationship. It is not intended as legal advice from Harper Grey LLP or the individual author(s), nor intended as a substitute for legal advice on any specific subject matter. Detailed legal counsel should be sought prior to undertaking any legal matter. The information contained in this Article is current to the last update and may change. Last Update: March 10, 2023.

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