On June 8th, the Canadian government unveiled its first carbon offset trading protocol which is a first step towards the creation of a federal carbon credit exchange system. Currently, the federal cost for one tonne of carbon equivalent is $50 for facilities that generate more than 50,000 tonnes of greenhouse gas (GHG) emissions, but that number is set to climb to $170 by 2030. As such, the new federal carbon offset credit system offers companies an opportunity to reduce the cost of carbon by generating offset credits through emission reduction projects.
The government also introduced the first protocol which covers methane emissions from the landfill industry. Four more protocols are in the works including a refrigeration program that could be of interest to retailers. The refrigeration protocol, expected to be introduced in the Fall, will aim to give companies the opportunity to generate carbon offset credits by reducing hydrofluorocarbons (HFCs) greenhouse gas emissions from either refrigeration or air conditioning equipment caused by releases during equipment installation, leaks from normal operations and when charging equipment with refrigerant.
The federal government continues to develop three other protocols that may impact the retail supply chain including improved forest management, enhanced soil organic carbon and livestock feed management. The new GHG offset credit system is intended to be an important economic instrument that will help Canada meet its 2050 goal of net zero emissions and meet international commitments under The Paris Agreement to limit global warming to well below 2, preferably to 1.5 degrees Celsius, compared to pre-industrial levels.