Canada Looks to Enter International Carbon Market

The Government of Canada revealed on Thursday that it is exploring the development of a new framework which could allow Canadian companies to participate in international carbon markets, which it said could contribute billions of dollars to the Canadian economy and catalyze the development of domestic climate mitigation projects and technologies.

The new policy framework would Canada to join the market to trade internationally transferred mitigation outcomes (ITMOs). The potential for countries to use ITMOs to reach their climate goals was facilitated by an agreement reached at the COP 29 UN climate conference in November 2024 on Article 6 of the Paris Agreement, aimed at establishing high integrity carbon markets, including detailing how countries will authorize carbon credit trading and how registries tracking this trading will operate to enable country-to-country carbon market trading.

Under the proposed new framework, the government said that it will ensure that any ITMO trading activities are aligned with Article 6 rules and guidance to ensure environmental integrity and rigorous accounting, ensuring that emissions reductions and removals traded between countries are real, additional, verified, and permanent, in addition to providing investors with the certainty needed to unlock the full potential of carbon markets.

In its announcement, the government cited research by non-profit advocacy group Carbon Removal Canada, indicating that a scaled-up carbon dioxide removal industry in Canada could contribute billions to Canada’s GDP and create hundreds of thousands of jobs.

Na’im Merchant, Executive Director at Carbon Removal Canada, said:

“We’ve spent the past year making the case that Canada needs this to compete internationally, and we’re glad to see it move forward. This is a step we and many others in the sector have been encouraging for some time, and we thank officials across government who engaged directly.”

The government statement also highlighted Canada’s potential to become a leading producer of high-quality carbon removal technologies, given the combination of the country’s industrial capabilities, geology, clean power, abundant natural resources, and strong policy foundation.

Julie Dabrusin, Minister of the Environment, Climate Change and Nature, said:

“This is about turning our natural advantages and homegrown climate innovation into investment, good jobs, and new export opportunities. A clear framework for international carbon credit transfers can help Canadian companies scale, attract capital, and bring more innovative technologies to market, strengthening our position as a leader in the global clean economy.”