Delivering on commitments made in A Healthy Environment and a Healthy Economy, and Canada's 2030 Emissions Reduction Plan, the Government has developed Canada's Greenhouse Gas (GHG) Offset Credit System under the Greenhouse Gas Pollution Pricing Act (GGPPA). This system was built based on the recommendations for the design of offset systems in the Pan-Canadian Offset Framework (PDF), agreed to by the Canadian Council of Ministers for the Environment and published in October 2019.
Canada's GHG Offset Credit System will encourage voluntary project activities across Canada that reduce GHG emissions or remove them from the atmosphere. For every tonne of carbon dioxide equivalent reduced, a project is awarded one offset credit. These credits can be used by industries regulated under the federal Output-Based Pricing System as a way to meet their compliance obligations and help reduce the overall cost of compliance. These credits can also be used by businesses and governments across Canada, for example toward meeting carbon‑neutral or net-zero commitments to reduce emissions. Canada's GHG Offset Credit System will create further incentives to reduce emissions and will generate additional economic opportunities in sectors such as agriculture, forestry, and waste.
Under the Output-Based Pricing System, when facilities exceed their emissions limits, they may provide compensation through one or a combination of the following:
- paying an excess emissions charge; or
- remitting surplus credits, federal offset credits, or recognized units (eligible provincial offset credits).
Offset project activities must be in addition to what would have occurred anyway. That is, in order for the project to generate offset credits under Canada's GHG Offset Credit System, project activities must result in GHG reductions or removals that go beyond business-as-usual practices and legal requirements, and must not already be incentivized by carbon pollution pricing.
