Canada unveils new measures to nudge polluters toward clean tech


Prime Minister Justin Trudeau walks to a news conference in Ottawa on June 18, 2019, flanked by his staffers and bodyguards. File photo by Andrew Meade

Canada is proposing new market-based incentives to support clean-tech companies as part of a suite of new policies announced on Friday that include a crackdown on pollution from large industrial facilities.

The policies add some new meat on the bones of the Trudeau government’s strategy to tackle the global climate crisis. Canada’s new proposal also opens the door to allowing companies to get credit for reducing emissions by spending money on projects overseas.

Ottawa’s carbon pricing system is composed of two main parts: a federal charge on fossil fuels, which has received the lion’s share of attention, and a related system for large industrial polluters called the Output-Based Pricing System.

That system establishes a trading market to crack down on carbon emissions. It requires big facilities like factories that emit more than 50,000 tonnes of carbon pollution per year to record their emissions against a “performance standard” for the sector to which the facility belongs.

If they pollute less than the standard, they receive credits; if they pollute more, they have the option of either paying the federal government directly using its carbon tax rate, submitting “surplus credits” bought from others or saved up, or submitting “offset credits” earned from projects that reduce emissions.

The idea is that each offset credit represents one tonne of carbon dioxide that won’t go into the atmosphere, heating the planet and worsening climate change, compared to what would have happened under business as usual.

Ottawa says this will create market opportunities for clean-tech businesses in agriculture, waste and forestry. On Friday, it proposed a series of guidelines for how this system might work.

Projects must be based in Canada, and the emissions they are eliminating must be covered in Canada’s national inventory report that is submitted to the United Nations.

They must also be “specific and identifiable” and result in a net reduction of carbon pollution “that can be demonstrated to have been implemented.”

The project type must be federally approved, the reductions must be “quantified in a transparent and repeatable manner” and reductions must go beyond what would normally occur from that business.

Credits can’t be double-counted and the project must be monitored and documented to allow a verification body full access.

Ottawa is soliciting public feedback on this offset system proposal through Aug. 30.


Prime Minister Justin Trudeau speaks to reporters in Ottawa on June 18 as Finance Minister Bill Morneau and Environment Minister Catherine McKenna look on. File photo by Andrew Meade

Canada is proposing new market-based incentives to support clean-tech companies as part of a suite of new policies announced on Friday that include a crackdown on pollution from large industrial facilities.

The policies add some new meat on the bones of the Trudeau government’s strategy to tackle the global climate crisis. Canada’s new proposal also opens the door to allowing companies to get credit for reducing emissions by spending money on projects overseas.

Ottawa’s carbon pricing system is composed of two main parts: a federal charge on fossil fuels, which has received the lion’s share of attention, and a related system for large industrial polluters called the Output-Based Pricing System.

That system establishes a trading market to crack down on carbon emissions. It requires big facilities like factories that emit more than 50,000 tonnes of carbon pollution per year to record their emissions against a “performance standard” for the sector to which the facility belongs.

If they pollute less than the standard, they receive credits; if they pollute more, they have the option of either paying the federal government directly using its carbon tax rate, submitting “surplus credits” bought from others or saved up, or submitting “offset credits” earned from projects that reduce emissions.

The idea is that each offset credit represents one tonne of carbon dioxide that won’t go into the atmosphere, heating the planet and worsening climate change, compared to what would have happened under business as usual.

Ottawa says this will create market opportunities for clean-tech businesses in agriculture, waste and forestry. On Friday, it proposeda series of guidelines for how this system might work.

Projects must be based in Canada, and the emissions they are eliminating must be covered in Canada’s national inventory report that is submitted to the United Nations.

They must also be “specific and identifiable” and result in a net reduction of carbon pollution “that can be demonstrated to have been implemented.”

The project type must be federally approved, the reductions must be “quantified in a transparent and repeatable manner” and reductions must go beyond what would normally occur from that business.

Credits can’t be double-counted and the project must be monitored and documented to allow a verification body full access.

Ottawa is soliciting public feedback on this offset system proposal through Aug. 30.

Prime Minister Justin Trudeau speaks to reporters in Ottawa on June 18 as Finance Minister Bill Morneau and Environment Minister Catherine McKenna look on. File photo by Andrew Meade

The Liberal government has said the revenues from carbon pricing will be reinvested in the province or territory that the money came from. For provinces and territories with their own carbon pricing plans, the federal government will give them direct proceeds.

In the regions without their own pricing plans, it gets more complicated. With the fossil fuel tax, the government is rebating households directly through income tax returns. For the large-polluter program, however, it still needs to figure out how this will work.

Estimating revenue from that program is much harder, federal officials said Friday, given that polluters could use credits to meet their obligations instead of paying the carbon tax directly.

As a result, Ottawa also wants to hear from the public on how it should return the direct proceeds it collects, and will also accept feedback on that through the end of August. MORE

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