CALGARY — The federal government launched its first national carbon-offset program Wednesday, a significant move in Canada’s plan to encourage low-emissions investments and to help reach the country’s net-zero goals. 

Here’s what you need to know:

How will it work? Under the new regime, companies and individuals will be awarded a single credit for every tonne of carbon they can prove to have eliminated, which they can then sell on the open market. Buyers, like heavy polluters for example, can purchase those credits to offset their own emissions. The government is still determining some details, like how direct air carbon-capture technology, agriculture and forest management will be applied under the trading system. 

Similar carbon markets have been operating for years, most notably the European Union’s Emissions Trading System, the world’s first. British Columbia, Alberta, Quebec and Nova Scotia currently have provincial trading regimes in place. Ottawa has been signalling its intention to develop its own program since at least 2019, when it released a national policy framework that would, among other things, provide an “additional revenue stream” to companies. 

Why carbon offsets? The free market may work when it comes to driving innovation that generates profits. But it’s less effective when it comes to objectives like minimizing environmental harm. 

Carbon-trading systems are viewed as a key mechanism in reaching the country’s net-zero emissions goals, given that they effectively mimic the free market by attaching financial value to GHG reductions. 

“In principle, it helps to incentivize the right types of economic investments, so I think there’s something to be said for an offsets policy that can drive investments that otherwise wouldn’t happen,” Susannah Pierce, country chair of Shell Canada, told The Logic in an interview. 

In a statement, Environment Minister Stephen Guilbeault called the new system a “market-based mechanism” that would amount to a “win-win for the economy and the environment.” 

Just another greenwash? Some groups have dismissed offset markets as nothing more than a lifeboat for heavy polluters. 

“The government’s decision to double down on carbon offsets is a major step backwards for Canada’s climate ambitions,” Greenpeace said in a statement. 

“Offsetting doesn’t stop carbon from entering the atmosphere and warming our world, it just keeps it off the books of big polluters responsible.”