Ottawa explores international carbon credit trading under Paris Agreement

OTTAWA · Environment and Climate Change Minister Julie Dabrusin announced the federal government is examining a new framework for international carbon credit trading. The initiative, announced Sept. 24, would allow Canadian companies to participate in global markets for verified emissions reductions. It could open investment opportunities in carbon capture, emissions reduction and other clean technologies. The system would operate under Article 6 of the Paris Agreement, which governs the transfer of mitigation outcomes between countries.

"The trading of ITMOs under the Paris Agreement can unlock greater global climate action by making it easier to transfer emission reductions and removals between countries," Dabrusin said. She added that "this is about turning our natural advantages and homegrown climate innovation into investment, good jobs, and new export opportunities." The federal government says the framework could attract financing for Canadian carbon removal technologies and nature-based solutions. It would allow a country to help meet its climate targets by purchasing credits from emission reduction projects in another participating nation.

Under the proposed rules, credits must represent emissions reductions or removals that would not have occurred without the arrangement. The framework must prevent double counting, where both the selling and buying country claim the same reduction. Participating countries would need systems for tracking, verifying and accounting for all transferred credits. Ottawa says any Canadian system would need to ensure reductions are real, additional, verified and permanent.

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The proposal could create new market opportunities in Saskatchewan, where carbon capture and agricultural practices can reduce emissions. The federal government has not identified any specific projects in the province that would qualify. Eligibility and potential financial benefits for industries would depend on the final framework design. The government cited research suggesting a large carbon dioxide removal industry could add billions to Canada's GDP by 2050 and create hundreds of thousands of jobs.

Officials say the work will now focus on establishing the required accounting and regulatory processes. The government plans to engage with provincial and territorial governments and Indigenous organizations. No timeline has been set for implementing a trading system. For now, the initiative remains exploratory, with no final framework or participation rules announced.

With files from WestCentralOnline