The Canadian Government has announced plans to set up a carbon market in Canada by moving forward with its offset system for greenhouse gases.

The offset system will establish tradable credits and encourage cost-effective domestic greenhouse gas reductions in areas that will not be covered by planned federal greenhouse gas regulations, like the forestry and agricultural sectors.

“The offset system is an important part of Canada’s efforts to reduce greenhouse gases,” says Canada’s Environment Minister, Jim Prentice.

Potential offset projects could include methane capture and destruction from landfill gas, the creation of new forests or agricultural soil management.

“This system is one of several steps we are taking as we finalise our domestic regulatory framework for greenhouse gas emissions, and marks a major milestone as we move towards establishing a carbon market in Canada,” Prentice said.

Canadian companies subject to greenhouse gas emissions regulations will be able to purchase offset credits on the carbon market and use these credits for compliance with their regulated targets.

Other organisations such as small businesses, individuals and travellers, will be able to acquire and use these credits to voluntarily offset the greenhouse gas emissions from their activities, according to the proposals.