Carbon pollution pricing: options for a Federal Greenhouse Gas Offset System, chapter 12

Environment and Climate Change Canada will base the quantification, monitoring and reporting requirements established in the Federal Offset Protocols on the framework and principles of the international standard ISO 14064-2, Specification with Guidance at the Project Level for Quantification, Monitoring and Reporting of Greenhouse Gas Emissions Reductions or Removal Enhancements. The Federal Offset Protocols will adhere to the principles of relevance, completeness, consistency, accuracy, transparency and conservativeness. Each Federal Offset Protocol will address the following elements:

Additionality

Additionality is the key element of an offset project. A project in the Federal Greenhouse Gas (GHG) Offset System can only be considered additional, and therefore eligible to generate Offset Credits, if the project activities are above and beyond a business-as-usual scenario that includes any relevant legal and/or regulatory requirements such as carbon pollution pricing. The GHG reduction technology or project activity must not be in common use or be considered common practice. As the additionality of project activities may differ from jurisdiction to jurisdiction across Canada, Federal Offset Protocols should reflect these regional differences to the extent practicable and allow for establishment of jurisdiction-specific baselines.

Leakage

Leakage may occur when the efforts to achieve GHG reductions result in release of GHGs in another location (thereby resulting in no net GHG reductions). Federal Offset Protocols will take into account the possibility of leakage for relevant project types. Federal GHG Offset Protocols will specify how project proponents must assess potential for leakage and identify mitigation approaches for addressing these risks. In cases where leakage may occur despite best efforts to prevent it, the Federal Offset Protocol may specify a discount factor, applied towards the quantity of Offset Credits issued to a project proponent to compensate or account for leakage.

Verifiability

A GHG reduction is verifiable if its quantification is accurate, transparent and replicable, and the underlying data and other supporting documentation confirming the quantification can be made available to a verification body in the future. Federal Offset Protocols will specify requirements for data collection and data management systems and controls, record keeping, and ongoing monitoring that lead to the generation of verifiable data.

Permanence

For project activities that involve GHG sequestration, a Federal Offset Protocol will specify requirements for Project Proponents to monitor permanence of the GHG sinks and reservoirs over the applicable duration of the offset project, mitigate the risk of reversal of sequestered GHGs, and develop a contingency plan which addresses how any reversal (whether intentional or unintentional) will be quantified and handled. Environment and Climate Change Canada proposes that for biological sequestration projects, Project Proponents will be required to maintain a carbon sink for a number of years following the end of the final reporting period in the final registration period. Establishing a liability period for sequestration projects aligns with many other offset programs in North America and will be established around rules for reversals in existing offset systems, review of best practices and comments from stakeholders.