Carbon-credit rules clarified for large emitters

Summary#

These are proposed changes to the Output-Based Pricing System Regulations under the Greenhouse Gas Pollution Pricing Act. The changes clarify how carbon credits or units are tracked and used, and would require measures to prevent one emission reduction from generating more than one credit or being used more than once. The proposal was published on November 9, 2024 and interested parties have 60 days to comment.

What it does#

• Clarifies the date that a credit or unit is considered retired or designated for compliance use by a province or program authority.
• Requires measures to ensure that one tonne of greenhouse gas reduction or removal leads to no more than one credit or unit.
• Requires measures to ensure a credit or unit issued under a program cannot be used by more than one person.
• Clarifies that a credit or unit must be designated by the province or program authority that issued it before it can be used for federal remittance under the Act.

Who's affected#

• Provincial governments and the provincial or program authorities that issue carbon credits or compliance units.
• Industrial facilities covered by the Output-Based Pricing System Regulations (large emitters who use credits or units to meet obligations).
• Project developers, registries, and brokers who create, track, sell, or transfer credits and units.
• The federal Department of the Environment, which is running the consultation and would oversee implementation.

If it is unclear who is affected in a specific case (for example, a particular provincial program), that uncertainty remains in the proposal.

Why it matters#

• The rules aim to reduce double counting and confusion about who can claim or use a carbon credit. That can strengthen confidence in carbon credits and make compliance accounting clearer.
• For companies that buy or sell credits, the changes could affect how credits are issued, tracked, retired, and accepted for compliance—potentially changing bookkeeping and contract terms.
• For provincial programs, the changes clarify the role of the province or program authority in designating credits for federal compliance.
• This is a proposed rule, not yet law. Comments are open for 60 days from November 9, 2024. The regulations would come into force on the day they are registered, but no specific registration date is given in the notice.