The Imperial Strathcona Refinery which produces petrochemicals is seen near Edmonton, Alberta, Canada, October 7, 2021.
The Imperial Strathcona Refinery which produces petrochemicals is seen near Edmonton, Alberta, Canada, October 7, 2021. Reuters / TODD KOROL

Canada on Wednesday launched a credit system for greenhouse gas reductions, a major part of its plan to cut carbon emissions, starting with a set of rules stipulating how projects can generate tradeable credits by capturing gas from landfills.

The government said protocols for four other sectors including agriculture and forest management are underway. It will also start developing protocols for carbon capture technology, which Canada's high-polluting oil industry is betting on to slash its emissions, this summer.

Prime Minister Justin Trudeau's Liberal government has pledged to cut climate-warming emissions 40-45% below 2005 levels by 2030. Greenhouse gas emissions from waste, including landfills, make up 7% of Canada's total carbon output.

The greenhouse gas offset credit system is intended to support a domestic carbon trading market, and the government said it will create new economic opportunities for companies and municipalities reducing emissions.

Participants will be able register projects and generate one tradeable offset credit for each tonne of emissions reduced, providing their projects follow the federal offset protocols that set out exactly which activities are eligible.

Credits can then be sold to others, such as heavy industrial emitters obliged limit carbon pollution, or to companies wanting to voluntarily offset their emissions.

"Starting with landfills, we're putting in place a market-based mechanism to incentivize businesses and municipalities to invest in the technologies and innovations that cut pollution," federal Environment Minister Steven Guilbeault said in a statement.

To generate credits, offset projects must be additional - meaning they go beyond common practice and existing legal requirements, and must not already be incentivized by Canada's carbon price.

The government expects the price of credits to broadly track Canada's price on carbon, which is currently set at C$50 a tonne and will ramp up to C$170 a tonne by 2030.