The first government program in North America to purchase greenhouse gas emission reductions from the private sector was launched in Canada on October 17. With provincial cooperation, the Canadian government expects to purchase 18 megatons of CO₂ equivalents by 2007, roughly 8% of the cuts that Canada must make to meet its pledge under the Kyoto Protocol’s first commitment period from 2008 to 2012.

The Pilot Emission Removals, Reductions and Learnings (PERRL) program has budgeted $8.4 million to purchase reductions over the next five years from landfill gas capture, geological CO₂ sequestration, renewable energy projects, and biological carbon sinks. “PERRL provides concrete incentives to reduce emissions and will help Canadian [provincial and federal] governments and businesses learn about emissions trading,” says Steve Blight, acting director of regulatory and economic analysis for Environment Canada. Canada is following the lead of Australia, which already has a full-fledged emission reduction purchase program in place, Blight says.

Participants will submit bids proposing a fixed price per ton for their projects and the Canadian government will purchase greenhouse gas reductions from the lowest bidders first until the budget is used up, Blight says. Emissions reductions purchased through PERRL must be real, measurable, verified, not required by regulations, and must start after, not before, a purchase agreement is made. Program requirements call for a third-party audit, conducted by a professional engineer or certified accountant, to verify emission removals or reductions.

PERRL is a very welcome policy tool, although Environment Canada can’t guarantee that projects are “additional”, in other words, go above and beyond any reductions that would have taken place as a normal course of business, says Matthew Bramley, director of climate change for the Pembina Institute, a research organization. “Additionality” is difficult to prove without a detailed economic investigation, and this is why trading is problematic, he says.

Meanwhile, the volume of CO₂ allowances traded on the international market more than doubled between 2001 and the first six months of 2002 to 24 metric tons of CO₂ equivalent, according to a World Bank report released October 21. The price ranged from $3 per ton in developing countries to $10 per ton in industrialized countries, reports State of the Carbon Market, which can be read at www.worldbank.org. —JANET PELLEY