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Ottawa’s New Carbon Offset Market Lets Big Industry Keep Polluting, Critics Warn

June 10, 2022
Reading time: 3 minutes
Full Story: The Canadian Press @CdnPressNews
Primary Author: Mia Rabson @mrabson

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Canada’s first federal carbon offset market kicked off Wednesday as the final piece of the puzzle in the carbon price for big industry takes shape.

But the arrival of the new offset system was greeted without applause by climate activists who say it simply makes it cheaper for big industry to keep polluting, The Canadian Press reports.

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Carbon offsets allow governments, companies, and other organizations that emit greenhouse gases to pay for those emissions by buying credits created when emissions are cut somewhere else. Voluntary markets have existed for years, as private companies raised capital for emissions-reducing projects like wind farms and tree planting, by selling credits to people looking to pay for their own carbon footprint.

Compliance markets are newer and allow entities that pay a carbon price to lower the amount of emissions they must cover by buying credits from a regulated market. The cost of the credits is almost always less than the equivalent carbon price—on average about 10 to 20% less in compliance markets that already exist.

British Columbia, Quebec, and Alberta have some compliance credit systems already but there was not one at the national level until now.

Environment Minister Steven Guilbeault said Wednesday the new federal system is a key piece of Canada’s ability to hit its emissions target for 2030 and get to net-zero emissions by 2050.

“Climate change is the crisis that will persist,” he said. “That’s why we cannot pause and we must continue to go faster and further.”

The new system targets the big industrial emitters that pay the federal carbon price, but any entity in Canada can buy offset credits from the system. The companies in the federal carbon pricing system can only use credits for about 75% of their covered emissions.

For now, only municipalities that install new methane capture systems at landfills will be part of the new compliance market. Over the next year, the government intends to finish the rules to add projects that cut emissions from refrigeration systems, forests, and soil management on farms.

The government said it is also now starting to write the rules to add direct air capture technology that pulls carbon dioxide out of the air and traps it underground.

One credit will be created for every tonne of emissions reduced by approved projects. They will only count after being audited to ensure those cuts are not being made to comply with existing regulations or carbon pricing. The cuts also have to be permanent and they will be tracked on a public register.

Louise Comeau, director of climate change and energy solutions at the Conservation Council of New Brunswick, said big industry in Canada is already being asked to do very little about its own emissions.

Big emitters covered by the federal carbon price pay that cost –currently C$50 a tonne—on only five to 20% of the greenhouse gases they produce.

Comeau said cutting the cost by allowing emitters to buy credits for less than the price of the carbon simply lowers their financial incentive to cut their own emissions.

“The whole thing is ridiculous,” she told CP.

Not to mention, she said, the emissions being cut at landfills, farms, and forests should be considered additional to the cuts needed from big industry. It’s not an either-or situation, she said.

Shane Moffatt, head of the nature and food campaign at Greenpeace Canada, called the announcement a “massive step back.”

“This doesn’t get us anywhere,” he said. “The carbon market is a shell game.”

This report by The Canadian Press was first published June 8, 2022.



in Canada, Carbon Levels & Measurement, Cities & Communities, Energy / Carbon Pricing & Economics, Finance & Investment, Soil & Natural Sequestration, Sub-National Governments

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