On March 5, 2021, the Federal Government published draft regulations governing the federal Greenhouse Gas (“GHG”) offset system (the “Draft Regulations”). The Draft Regulations propose a regulatory framework to govern the operational elements of the federal GHG Offset System. Stakeholders may provide written comments on the Draft Regulations until May 5, 2021.


In an earlier post, we discussed the Federal Government’s recently published list of project types associated with Federal Offset Protocols (the “Protocols”) that are currently in development. The Protocols will, among other things, establish an approved approach for quantifying GHG emission reductions for applicable offset projects.

The Protocols will constitute one of multiple types of regulatory instruments that will govern the federal GHG offset system. The federal GHG offset system is a program contemplated by the Greenhouse Gas Pollution Pricing Act (the “Act”) that will allow for firms that voluntarily reduce or avoid emissions from the source or increase removals by GHG sinks to generate offset credits. The Draft Regulations provide significant visibility into the proposed framework that will govern the future federal GHG offset system.

Draft Regulations

The Draft Regulations are made under the authority of Section 195 of the Act to implement the operational framework for the federal GHG offset system. Below is a high-level summary of matters covered by the Draft Regulations:

  • Registration application requirements – specifies the information that a project proponent must provide when registering or transferring a registration for an offset project
  • Project eligibility criteria – specifies requirements to receive offset credits in respect of a project (such as submission of project report) and methods to calculate offset credits
  • Crediting and reporting – specifies the length of the periods during which various types of offset projects are eligible to generate credits (known as crediting periods)
  • Environmental integrity account – establishes a pool of credits acting as a form of insurance for the environmental integrity of the federal offset system
  • Project verification – specifies the content and process surrounding third -party verifications of project reports, and standards applicable to verifications
  • Protocols – specifies the content of Protocols established by the Minister, which may include, among other things, methods for the quantification of GHG reductions and the assessment of risks specific to the project activity
  • Consequential regulations – provides consequential amendments to the Output Based Pricing System Regulations.

The Draft Regulations and their corresponding Regulatory Impact Analysis Statement can be accessed here.

Stakeholders have a 60-day period ending on May 5, 2021 to provide written comments on the Draft Regulations to Environment and Climate Change Canada.