Output-Based Pricing System Regulations

Marginal note:Compliance unit

• 78 (1) A unit or credit is to be recognized as a compliance unit if

  • (a) it is issued by a province or by a program authority on behalf of a province;

  • (b) it is issued under an offset protocol and offset program that is set out on the list published on the Department of the Environment’s website;

  • (c) it is eligible for use as a method of compensation or compliance with respect to a pricing mechanism for GHG emissions in the province in which it was issued; and

  • (d) it corresponds to a GHG reduction or removal of one CO₂e tonne.

• Marginal note:Offset programs

  (2) In establishing the list of offset programs, the Minister must ensure that each one includes the following elements:

  • (a) rules regarding governance, oversight and enforcement;

  • (b) rules regarding registration and renewal of projects;

  • (c) rules regarding the establishment of periods within which units or credits may be issued;

  • (d) rules regarding who is entitled to the credit or unit for the GHG reductions or removals;

  • (e) measures to ensure that GHG reductions and removals are additional and permanent and that reversal risks have been mitigated;

  • (f) measures to ensure that, for a GHG reduction or removal of one CO₂e tonne, one credit or unit is issued and the unit or credit is not used more than once;

  • (g) publicly available information on projects, protocols and units or credits; and

  • (h) a requirement that, prior to the issuance of a unit or credit, there be a verification by a third party in accordance with procedures that allow them to determine with a reasonable level of assurance that the associated project meets the requirements of the protocol and program.

• Marginal note:Offset protocols

  (3) In establishing the list of offset protocols recognized under a program referred to in subsection (2), the Minister must verify that each protocol ensures that

  • (a) the reduction or removal is with respect to a GHG;

  • (b) the reduction or removal is not subject to carbon pollution pricing;

  • (c) the GHG reduction or removal is quantified using scientifically-established methods that allow for

    • (i) the calculation of the quantity of GHG emissions or removals for each GHG source, sink and reservoir,

    • (ii) the quantification of reversals,

    • (ii.1) the assessment of leakage risks,

    • (iii) the calculation of the quantity of GHG reductions or removals that would not have occurred in comparison with the baseline scenario, and

    • (iv) the use of conservative quantification assumptions and approaches;

  • (c.1) the baseline scenario used reflects the most recent data available, any legal requirements and current practices with respect to the activity that is the subject of the protocol;

  • (d) best practices are used for

    • (i) data gathering and management,

    • (ii) record keeping,

    • (iii) the ongoing monitoring of offset projects, including permanence, and

    • (iv) quality assurance and quality control; and

  • (e) the GHG global warming potentials used in calculations are less than or equal to those set out in column 2 of Schedule 3 to the Act.

• Marginal note:Recognized unit or credit

  (4) A recognized unit or credit must, at the time of its remittance to the Minister,

  • (a) be valid;

  • (b) have been issued in respect of a project that uses a protocol referred to in subsection (3);

  • (c) have been issued in respect of a project located in Canada that began in 2017 or later;

  • (d) have been verified by a verification body that

    • (i) is accredited as a verification body to the ISO Standard 14065 by the Standards Council of Canada, the ANSI National Accreditation Board or any other accreditation organization that is a member of the International Accreditation Forum, and

    • (ii) is not suspended by the accreditation organization that issued its accreditation nor suspended at the time the verification relative to the issuance of the unit or credit occurred or at the time the verification report related to the issuance of the unit or credit was signed; and

  • (e) be designated for use exclusively as a compliance unit for the purposes of remittance to the Minister under section 174, paragraph 178(1)(a) or subsection 181(2) of the Act.