CANADA Law and Practice Contributed by: Thomas McInerney, Selina Lee-Andersen, Sonia J. Struthers and Elyse Bouey, McCarthy Tétrault LLP
2023), which became law in June 2024 and introduced express provisions requiring environmental claims about products and businesses to be adequately substantiated. The Competition Bureau issued final guidelines on environmental claims in June 2025.
comes from official Canadian government sources, guidance on legal and regulatory risk, and independ - ent market resources. 3.2 Carbon Pricing and Trade Impacts A central trade consideration of carbon pricing for Canada is maintaining the competitiveness of Cana - dian businesses while reducing emissions. This rationale was decisive in the April 2025 removal of the consumer fuel charge: the Part 1 fuel-charge rates in Schedule 2 of the GGPPA were set to zero, while industrial carbon pricing under the OBPS was retained. The stated objective was to refocus the federal sys - tem on industrial pricing – identified in the regulatory rationale (citing independent research) as the main driver of carbon-pricing-related emissions reductions to 2030 – while protecting emissions-intensive, trade- exposed industry against the competitiveness and carbon-leakage impacts of a domestic carbon price. The OBPS keeps a price signal on large emitters and encourages the transition to low-carbon technologies without exposing those sectors to leakage risk. The most significant external driver of this com - petitiveness calculus is now the EU Carbon Border Adjustment Mechanism (CBAM). CBAM places a carbon price on imports into the EU of certain car - bon-intensive goods (iron, steel, cement, fertilisers, aluminium, electricity and hydrogen) so that non- EU producers face carbon costs comparable to EU producers, addressing carbon leakage. After a tran - sitional reporting phase that began on 1 October 2023, the definitive regime started on1 January 2026. Critically for Canadian exporters of these products, where a carbon price has already been paid in the country of production, the corresponding amount may be deducted from the CBAM obligation. A credible domestic carbon price therefore reduces the CBAM cost borne by Canadian goods entering the EU, rein - forcing the rationale for retaining industrial carbon pricing even after the consumer charge was removed. Canada has itself examined border carbon adjust - ments (BCAs) but consultation on that issue has been archived, and there does not appear to be a live fed - eral BCA workstream.
3. Responses to International Developments 3.1 Voluntary Carbon Markets
Participants in Canada are free to transact in voluntary carbon credits issued under independent standards such as Verra’s Verified Carbon Standard or the Gold Standard. Although Canada’s voluntary carbon mar - ket (VCM) is smaller than its compliance counterpart, voluntary frameworks remain a key mechanism for driving innovation and financing GHG emission reduc - tions and removals outside the compliance space. The Canadian VCM encompasses a diverse range of project types, including nature-based solutions (affor - estation, improved forest management and wetland restoration), methane capture and destruction, landfill gas recovery, agricultural practices, carbon capture and storage, and emerging carbon-dioxide-removal technologies. Currently, there is no indication that Canada has plans to introduce legislation to regulate the domestic volun - tary carbon market. To date, Canada has focused on protocol-based compliance and offset infrastructure rather than direct regulation of VCM transactions. It is likely that Canada’s VCM will continue to be guided by compliance market design, climate disclosure require - ments, greenwashing regulations and possible imple - mentation of Article 6 mechanisms. The voluntary market remains distinct from Canada’s federal and provincial compliance carbon-pricing systems, so voluntary carbon credits are not directly fungible into domestic compliance schemes. To be accepted as an eligible offset unit for compliance purposes under a domestic compliance scheme, a carbon credit must be expressly recognised by that scheme. Canada does not have a single public portal dedicated to VCM information, but publicly available information
16 CHAMBERS.COM
Powered by FlippingBook