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Canadian Greenhouse Gas Offset Credit System Regulations (SOR/2022-111)

Regulations are current to 2024-02-06

Canadian Greenhouse Gas Offset Credit System Regulations

SOR/2022-111

ENVIRONMENTAL VIOLATIONS ADMINISTRATIVE MONETARY PENALTIES ACT

GREENHOUSE GAS POLLUTION PRICING ACT

Registration 2022-05-20

Canadian Greenhouse Gas Offset Credit System Regulations

P.C. 2022-529 2022-05-19

Her Excellency the Governor General in Council, on the recommendation of the Minister of the Environment, makes the annexed Canadian Greenhouse Gas Offset Credit System Regulations pursuant to

Interpretation

Marginal note:Definitions

  •  (1) The following definitions apply in these Regulations.

    Act

    Act means the Greenhouse Gas Pollution Pricing Act. (Loi)

    authorized official

    authorized official means

    • (a) in respect of a proponent who is an individual, that individual or another individual who is authorized to act on their behalf;

    • (b) in respect of a proponent that is a corporation, an officer of the corporation who is authorized to act on its behalf; and

    • (c) in respect of a proponent that is another entity, an individual who is authorized to act on its behalf. (agent autorisé)

    Compendium of Federal Offset Protocols

    Compendium of Federal Offset Protocols means the document, entitled Compendium of Federal Offset Protocols, that contains the protocols developed by the Department of the Environment and that is published by that Department on its website. (Recueil des protocoles fédéraux)

    crediting period

    crediting period means, with respect to a project, the period determined in section 5 or the period set out in the protocol during which offset credits can be generated. (période de comptabilisation)

    environmental integrity account

    environmental integrity account means the account opened and maintained by the Minister in the tracking system to maintain the integrity of the offset credit system. (compte d’intégrité environnementale)

    hybrid tonne-year

    hybrid tonne-year in relation to a quantification method, means the quantification method under which the determination of the quantity of GHGs removed from the atmosphere is based on the climate benefit from the reduced radiative forcing that results from withholding carbon from the atmosphere over the crediting period of the project, taking into account the obligation set out in subsection 22(2) that a proponent monitor the quantity of GHGs emitted and GHGs removed from the atmosphere with respect to a project for a given period. (hybride tonne-année)

    ISO Standard 14064-2

    ISO Standard 14064-2 means the standard ISO 14064-2:2019 entitled Greenhouse gases – Part 2 – Specification with guidance at the project level for quantification, monitoring and reporting greenhouse gas emission reductions or removal enhancements, published by the International Organization for Standardization. (norme ISO 14064-2)

    ISO Standard 14064-3

    ISO Standard 14064-3 means the standard ISO 14064-3:2019 entitled Greenhouse Gases – Part 3 – Specification with guidance for the verification and validation of greenhouse gas statements, published by the International Organization for Standardization. (norme ISO 14064-3)

    project

    project means a project that prevents GHGs from being emitted or that removes GHGs from the atmosphere. (projet)

    proponent

    proponent means the person responsible for a project. (promoteur)

    protocol

    protocol means a protocol for a given project type that includes requirements for project implementation and methods for quantifying the GHGs emitted or removed from the atmosphere for that project type and that is included in the Compendium of Federal Offset Protocols. (protocole)

    reservoir

    reservoir has the same meaning as GHG reservoir in ISO Standard 14064-2. (réservoir)

    reversal

    reversal means, with respect to a project, the release into the atmosphere of GHGs removed from the atmosphere by that project. (renversement)

    sink

    sink has the meaning assigned by the definition GHG sink in ISO Standard 14064-2. (puits)

    source

    source has the meaning assigned by the definition GHG source in ISO Standard 14064-2. (source)

    start date

    start date means, with respect to a project, the date that activities undertaken as part of the project begin, as determined in accordance with the applicable protocol. (date de début)

    tonne-tonne

    tonne-tonne in relation to a quantification method, means the quantification method under which the determination of the quantity of GHGs removed from the atmosphere is based on the number of tonnes of CO2 sequestered during the reporting period, taking into account the obligation set out in subsection 22(1), that the proponent must monitor the quantity of GHGs emitted and GHGs removed from the atmosphere with respect to the project for 100 years. (tonne-tonne)

    tonne-year

    tonne-year in relation to a quantification method, means the quantification method under which the determination of the quantity of GHGs removed from the atmosphere is based on the climate benefit from the reduced radiative forcing that results from withholding carbon from the atmosphere over a reporting period and for which the proponent is not required to monitor the quantity of GHGs emitted and GHGs removed from the atmosphere with respect to the project. (tonne-année)

    verification body

    verification body means a third party who is authorized under section 23 to conduct a verification. (organisme de vérification)

  • Marginal note:Incorporation by reference

    (2) Unless otherwise indicated, a reference to any document incorporated by reference into these Regulations is incorporated as amended from time to time.

  • Marginal note:Accreditation

    (3) Despite subsection (2), if ISO Standard 14065:2020 entitled General principles and requirements for bodies validating and verifying environmental information, published by the International Organization for Standardization, is amended, the previous version of the document may be complied with for a period of four years after the day on which the amended version is published.

  • Marginal note:Aggregation of projects

    (4) Unless otherwise specified, the provisions in these Regulations apply, with any modifications that the circumstances require, to aggregations of projects.

Purpose

Marginal note:Purpose

 These Regulations establish an offset credit system for projects that reduce GHGs either by preventing GHGs from being emitted or by removing GHGs from the atmosphere and to which a protocol applies.

Overview

Marginal note:Elements of the System

 These Regulations provide for

  • (a) the conditions for registering a project in the offset credit system, as well as the circumstances under which a registration can be cancelled;

  • (b) the requirements for proponents;

  • (c) the issuance of offset credits; and

  • (d) the requirements for keeping and retaining records.

Application

Marginal note:Project characteristics

  •  (1) These Regulations apply to a proponent of a project

    • (a) which is of a type for which a protocol has been included in the Compendium of Federal Offset Protocols;

    • (b) that aims to generate GHG reductions by preventing GHG emissions or removing GHGs from the atmosphere; and

    • (c) with respect to which the reductions are real, additional, quantified, verified, unique and permanent.

  • Marginal note:Reductions — additional

    (2) For the purposes of paragraph (1)(c), reductions are additional if those reductions

    • (a) would not have been generated in the absence of the project;

    • (b) were not required by law or the result of a legal requirement; and

    • (c) are not from sources, sinks and reservoirs that are subject to federal or provincial pricing mechanisms for GHG emissions.

  • Marginal note:Reductions — unique

    (3) For the purposes of paragraph (1)(c), reductions are unique if those reductions are not credited under another offset program or another GHG reduction mechanism.

  • Marginal note:Non-application

    (4) These Regulations do not apply to projects that have a start date before January 1, 2017.

Crediting Period

Marginal note:Crediting period

  •  (1) Unless otherwise provided in the applicable protocol, the period in respect of which a project can generate offset credits is

    • (a) in the case of a sequestration project related to forestry, 30 years;

    • (b) in the case of a sequestration project other than one related to forestry, 20 years; and

    • (c) in the case of any other project, 10 years.

  • Marginal note:Beginning of period

    (2) Subject to subsection (5), the crediting period begins on the day on which the project is registered or on the project start date, whichever is later.

  • Marginal note:Exception — beginning of period

    (3) Despite subsection (2), in the case of a project that is of an agricultural nature, if required in the protocol, the crediting period begins on the date of the start of the growing season. However, that date cannot be earlier than the day on which the project is registered or the project start date, whichever is later.

  • Marginal note:Exception — length of period

    (4) In the case of a project that was registered in a GHG offset credit system other than the one set out in these Regulations, the crediting period is decreased by subtracting the period that begins on the registration date in the other system and ends on the day on which the project is no longer registered in that other system.

  • Marginal note:Aggregation of projects

    (5) Subject to subsection (6), the crediting period for an aggregation of projects, registered in accordance with subsection 9(1), begins on the day on which the aggregation is registered or on the earliest project start date of any of the projects in the aggregation at the time of registration, whichever is later. However, if one of the projects in the aggregation starts after that day, the project cannot generate credits until that project’s start date.

  • Marginal note:Addition of projects

    (6) If a project is added to an aggregation under subsection 9(4) or if a project that is part of an aggregation is transferred to another aggregation under subsection 9(5), its crediting period begins on the day on which it is added or transferred, as the case may be, or on its project start date, whichever is later, and ends on the day on which the crediting period for the aggregation ends.

Protocol

Marginal note:Registration of a project

  •  (1) When a project is registered, the protocol or, if several versions of a protocol are included in the Compendium of Federal Offset Protocols, the most recent version of the protocol, is the one that applies for the duration of the crediting period.

  • Marginal note:Renewal of crediting period

    (2) If, at the time of a renewal of a crediting period, several versions of a protocol are included in the Compendium of Federal Offset Protocols, the most recent version of the protocol is the one that applies to the project for the duration of the crediting period.

  • Marginal note:Proponent’s choice

    (3) Despite subsections (1) and (2), if a new version of a protocol is issued during a project’s crediting period, a proponent may opt to have the new version apply to their project. However, only one version of a protocol may apply during the period covered by a project report.

  • Marginal note:Withdrawal

    (4) Despite subsections (1) and (2), if, at the time the application for registration of a project or the request for renewal of the crediting period is submitted, the protocol for the given project type is withdrawn, the application or request must be refused.

Process for Offset Credit Issuance

Requirements

Marginal note:General requirements

 To be issued offset credits by the Minister, the proponent of a project must

  • (a) have registered the project in accordance with section 8 or 9;

  • (b) be the holder of a GHG Offset Credit System account in the tracking system;

  • (c) implement the project in accordance with the applicable protocol;

  • (d) generate GHG reductions that are real, additional, quantified, verified, unique and permanent;

  • (e) prepare a project report in accordance with section 20 and have it verified by a verification body in accordance with sections 24 to 27;

  • (f) submit to the Minister the project reports, in accordance with subsection 20(7), accompanied by a verification report prepared in accordance with section 28;

  • (g) if applicable, submit to the Minister a corrected project report in accordance with section 32;

  • (h) if applicable, meet the obligations with respect to implementing a reversal risk management plan in accordance with subsection 21(2) and monitor the project in accordance with section 22, specifically submitting monitoring reports; and

  • (i) if the proponent was required to remit compliance units under section 181 of the Act, have met that obligation.

Project Registration

Marginal note:Conditions of registration

  •  (1) Subject to section 9, a project, of a type for which a protocol has been included in the Compendium of Federal Offset Protocols, may be registered in the offset credit system if its proponent submits an application for registration to the Minister that includes the information set out in Schedule 1 and the following conditions are met:

    • (a) the proponent is an individual who resides in Canada or, if the proponent is not an individual, the proponent has a place of business in Canada;

    • (b) the proponent has exclusive entitlement to claim the credits issued for the GHG reductions generated by the project;

    • (c) the proponent has the necessary authorizations to carry out the project activities;

    • (d) prior to the project start date, the baseline conditions set out in the protocol to be eligible under that protocol are met;

    • (e) the activities undertaken as part of the project to prevent GHGs from being emitted or to remove GHGs from the atmosphere are set out in the applicable protocol;

    • (f) the reductions that the project could generate would be additional;

    • (g) the project is not registered in any other offset credit system;

    • (h) no credits will be attributed under another GHG reduction mechanism for the GHG reductions generated by the project;

    • (i) no provincial offset credit protocol in the province in which the project is situated, established under an offset credit program for that province, covers the same activities as those set out in the applicable federal protocol;

    • (j) with respect to a sequestration project,

      • (i) the proponent has specified whether the tonne-tonne, tonne-year or hybrid tonne-year quantification method, as set out in the protocol, will be used for the duration of the project, and

      • (ii) in the case of a proponent opting for the tonne-tonne or hybrid tonne-year quantification method, the proponent has established a reversal risk management plan in accordance with section 21;

    • (k) a previous registration by the proponent of the project under these Regulations has not been cancelled as a result of a voluntary reversal;

    • (l) neither the proponent nor their authorized official has been found guilty of an offence under section 380 of the Criminal Code, within five years prior to submitting the application for registration; and

    • (m) the application for registration is submitted within the time limits set out in section 10.

  • Marginal note:Exception — provincial protocol

    (2) Despite paragraph (1)(i), in the case where a provincial offset credit protocol, established under an offset credit program for that province, applies to the activities undertaken as part of a project, the project may be registered if:

    • (a) the provincial protocol is published after the federal protocol is included in the Compendium of Federal Offset Protocols; and

    • (b) the application for registration is submitted no more than six months after the day on which the project could have been registered in the provincial offset credit program under that protocol.

  • Marginal note:Declaration

    (3) The application for registration must be accompanied by a declaration, dated and signed by the proponent or their authorized official, stating that the information contained in the application is accurate and complete.

  • Marginal note:Project in more than one province

    (4) If a project is situated in more than one province, the proponent must register, as distinct projects, the portions of the project situated in each province.

  • Marginal note:Request to open account

    (5) The proponent, in accordance with subsection 186(1) of the Act, must submit a request to open a GHG Offset Credit System account in the tracking system if they do not already have such an account.

 

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