OTTAWA (Reuters) - Canada on Wednesday unveiled plans for a national carbon market that it said would help cut emissions of greenhouse gases by making it more attractive to invest in clean energy projects.
Ottawa said the first major step would be to put a price on carbon, and Environment Minister Jim Prentice said it would be up to markets to set that price.
The announcement is an important step for the minority Conservative government, which opponents regularly accuse of not doing enough to protect the environment.
A key element of the market is a set of rules for carbon offset credits, which will come into force on Jan 1, 2011.
“The offset system will be a key part of our overall commitment. It is intended to generate real reductions on greenhouse emissions,” Prentice said in a speech in Ottawa.
Under the rules, companies and individuals would receive the credits for investing in clean energy projects like wind turbines and could sell those credits to enterprises that cannot meet targets for cuts in greenhouse gas emissions.
Planting new forests or capturing methane gas from landfills and turning it into a usable fuel could also be offset projects, Prentice said.
The offset system targets those parts of the economy that will not be covered by planned federal curbs on heavy industrial emitters of greenhouse gases.
One potential risk for the government is that Canada’s carbon market and credits system could be overshadowed by whatever happens in the United States.
Prentice said Canada’s plan was to set up a domestic carbon market first. It then hoped to move to a North American version including the United States before moving toward a global market.
“Clearly the United States is headed in the direction of a (carbon) marketplace, as is Canada. We have a very close dialogue with the United States on these issues,” he told reporters after the speech.
Canada previously planned to impose binding cuts on greenhouse gas emissions by major enterprises in 2010. But Prentice said last month that Ottawa would delay those cuts until it saw what Washington planned.
The government has pledged to cut Canada’s carbon emissions 20 percent from 2006 levels by 2020. Green activists say the cuts should be far more ambitious.
Prentice released initial proposals for the offset system on Wednesday. He said the final drafts would be published later this year after a 60-day period for public comments.
Reporting by David Ljunggren; editing by Janet Guttsman