Ministère de l’Environnement, de la Lutte contre les changements climatiques, de la Faune et des Parcs

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Carbon Market

Eligible Emission Allowances

To cover their emissions, emitters subject to the system must surrender a number of eligible emission allowances to the government corresponding to the emissions they reported (and that were verified) during a compliance period, i.e., one emission allowance per tonne of GHGs emitted into the atmosphere.

A compliance period generally lasts three years. It begins on January 1 of year one and ends on December 31 of year three. Emitters then have until the first business day of November of year four to transfer the eligible emission allowances into their compliance accounts to cover their emissions.

Chapter III of the Regulation respecting a cap-and-trade system for greenhouse gas emission allowances (Regulation) deals with GHG emissions coverage.

The eligibility of allowances to cover GHG emissions is consistent from one compliance period to the next:

Emission Units

Emission units eligible to cover emissions may come from either of the governments identified in Annex B.1 of the Regulation. Note that it is not possible for emitters and participants to identify the government that put the emission units they hold into circulation.
The vintage of emission units eligible to cover emissions must not be later than year three of the compliance period, but may correspond to previous vintages. Therefore, emission units from the 2013 to 2020 vintages are eligible to cover emissions from the 2018-2020 compliance period.
Non-vintage emission units, such as units from the Minister’s reserve, are eligible to cover emissions from all compliance periods.

Offset Credits

The amount of offset credits that can be used to cover emissions must not exceed 8% of the total emissions to be covered.
Offset credits used to cover emissions may have been issued by the governments identified in Annex B.1 of the Regulation. Unlike emission units, it is possible for emitters and participants to identify the government that issued the offset credits.
- Offset credits issued by California sometimes bear the designation “Direct Environmental Benefits” or DEBs.
- Starting in 2021, California will reduce the offset use limit to 4% of the total emissions to be covered by its emitters and require that half of the credits surrendered have the DEBs designation.
The offset credits eligible for emissions coverage are those from the vintage year following year three of the compliance period or a previous vintage. Therefore, offset credits from the 2021 vintage and earlier are eligible to cover emissions from the 2018-2020 compliance period.

Early Reduction Credits

Early reduction credits are eligible to cover emissions from all compliance periods.

Failure to Meet Emissions Coverage Requirements

Emitters with an insufficient number of eligible emission allowances in their compliance accounts on the first business day of November following the end of a compliance period will be subject to an automatic administrative sanction equal to 3 emission units or early reduction credits for each missing emission allowance (section 22 of Regulation), in addition to being required to surrender the number of missing allowances.

Additional information: