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Posted to EBR and Submitted to: Vidya Anderson, Project Manager
Ministry of the Environment and Climate Change (MOECC)
Environmental Programs Division, Program Planning and Implementation Branch
135 St. Clair Avenue West, Floor 11, Toronto, Ontario M4V 1P5


The International Emissions Trading Association (“IETA”) appreciates Ontario’s leadership in working to develop an effective voluntary offsets system as part of the province’s efforts to tackle climate change. We welcome publication of the consultation document, “Developing a Voluntary Carbon Offsets Program for Ontario” (“Discussion Paper”). IETA recognizes efforts, led by the Ministry of Environment and Climate Change (“MOECC”), in preparing this consultation draft outlining Ontario’s proposed set of rules and requirements to allow the Province to “lead by example through making government operations carbon neutral beginning in 2018” . Leveraging IETA’s extensive global carbon market expertise – across compliance, pre-compliance and voluntary offset programs – we welcome this opportunity to provide input on the design of Ontario’s proposed voluntary program.


For nearly two decades, IETA has been the premier international business voice on carbon pricing and climate finance, including the design and implementation of greenhouse gas (GHG) markets and offset systems. Our multi-sector non-profit organization – with major ties and membership across Ontario – represents over 150 Canadian and international companies. IETA’s experience and expertise is regularly called upon to inform climate policies that achieve real, quantifiable and verifiable GHG reductions, while balancing economic efficiencies with environmental integrity and social equity.


IETA applauds MOECC for recognizing the clear environmental and socio-economic benefits of offsets. As per the Regulation Notice Proposal (EBR #013-1634), “quality branded voluntary carbon offsets would: provide a mechanism for government, the private sector and others to reduce both their carbon and ecological footprints; facilitate participation by Indigenous, northern and agricultural communities and municipalities in the carbon market; promote additional environmental co-benefits; and drive innovation and support the transition to a low carbon economy” .

IETA commends the Ministry for “leading by example” by committing Ontario government operations to be carbon neutral by 2018. We also appreciate recent opportunities to lend technical and market expertise as MOECC develops a “quality, branded, voluntary offset class for use by government and the private sector for the purpose of further greening covered sectors” , including input on MOECC’s Discussion Paper.

The importance of offsets cannot be overstated. Offsets play a key role in providing the greatest climate benefits in the least time for a given expenditure of societal resources, eliminating GHG emissions as efficiently as possible. Government support for a robust voluntary carbon market enables the business community and other key stakeholders (e.g., farmers, foresters, Indigenous communities, etc.) to play their part in achieving real reductions while also driving innovation and delivering co-benefits. A properly designed voluntary carbon offsets program will complement existing regulation and compliance market measures, including Ontario’s recently launched cap-and-trade and compliance offsets programs.


IETA’s comments are structured around two sections. Section 1 features high-level priority input, generally relevant to all aspects across design, development and implementation of realizing a successful voluntary program. Section 2 contains more detailed input associated with specific sections and elements of the Discussion Paper, notably the eight (8) discussion questions posed by the Ministry .

Under Section 1, IETA's high-level priority input can be summarized as follows:

1.Prioritize compliance offsets program development.
2.Swift and transparent development of remaining compliance offset protocols.
3.Ensure integrity of voluntary action.
4.Adopt an “open architecture” approach.
5.Modify treatment of co-benefits.
6.Minimize transaction costs.
7.Clear, stable rules and offsets framework.
8.Enable linkage and cross-border compatibility.
9.Leverage IETA’s expertise to chart a smooth voluntary to compliance course.
10.Delegate authority to third-party registries.
11.Other measures to support market and provide long-term certainty.

Under Section 2, we provide technical input and recommendations on various elements of the Discussion Paper, specifically the discussion questions posed by the Ministry related to its proposed voluntary offsets program (reflected in the column numbers).

1.0Additional Priorities to Consider
2.0Program Objectives to Consider
3.0Specific Barriers to Participation to Consider
4.0Facilitating Community Participation
5.0Promoting Environmental Co-Benefits
6.0Assessing Project Types
7.0Supporting Viable End Markets for the Voluntary Program
8.0Existing Standards/Methodologies to Consider
9.0ICROA Experience & Code of Best Practice

IETA's comments are the result of deep experience and lessons learned across North American and international carbon markets as well as direct discussions with our members on these issues following the Ministry’s consultation. Our multi-sector business and offset expert insights are a testament to the iterative – yet increasingly robust and aligned – nature of GHG offset system design; an evolutionary process where jurisdictions are not only identifying best practices, but also seeking to embed and operationalize these elements into new or modified program improvements.

We look forward to close engagement with MOECC – and other relevant Ministries – as the Province further defines its voluntary carbon market and seeks to effectively demonstrate carbon neutrality.

If you have questions or follow-up related to this submission, contact Katie Sullivan, IETA Managing Director, at



The following shares IETA’s high-level priority input on MOECC’s Discussion Paper with respect to building, launching and linking an effective voluntary carbon offsets program in Ontario.


IETA recommends the Ministry prioritize the development of Ontario’s compliance offset program and associated protocols over the design and implementation of its voluntary carbon offsets program. For this reason, we recommend the Ministry explicitly recognize the voluntary program takes a secondary position to protocol development and offset issuances in the compliance offset system.


IETA welcomes the publication of Ontario’s first (Landfill Gas) draft protocol. However, we urge the MOECC to adapt and post all remaining offset protocols as soon as possible. Based on decades of experience, businesses that make offset projects possible require significant lead-times to mobilize finance, technical capabilities, technologies, and other resources to achieve sustained environmental outcomes. Even for protocols that become available during 2018, it may take well into 2019-2020 for registered “initiatives” to supply volumes into the market. As such, we urge the MOECC and its designated agent, the Climate Action Reserve (CAR), to work towards swiftly and transparently completing the adaptation and sharing of its (12) remaining eligible compliance offset protocols for Ontario.


IETA believes that voluntary offset protocols should be held to the same standard as compliance offsets. As such, the Ministry should aim to create voluntary offsets that are real, additional, permanent and verifiable. Measuring, reporting and verifying voluntary action will ensure environmental integrity – a paramount concern to ensure that proponents establish and support governance arrangements underpinned by quality, transparency and integrity of voluntary action. Ontario’s voluntary program should employ the highest standards with clear guidelines for environmental integrity so the province’s voluntary offset credits can ultimately be transferable as recognized reduction units in other programs.


IETA strongly recommends the Ontario government adopt an “open architecture” approach. This “open architecture” approach would allow independent standards, already established across key existing carbon markets, to be accredited under both the voluntary carbon offsets and compliance offsets programs. We do not believe there is a need for separate tracks on the supply side for compliance and voluntary offset arrangements. Creating an entirely new GHG crediting program, as the Ministry is proposing, will require a significant amount of resources and time, resulting in delays to the development of projects and higher transaction costs. Rather than reinventing the wheel, adopting an “open architecture” approach would leverage existing infrastructure in the voluntary market while ensuring broad market acceptability of the offsets.


IETA advises the Ministry against embedding Ontario-specific criteria for co-benefits and other non-carbon factors (e.g., local sourcing) within the offset protocols. Instead, we recommend the government incorporate co-benefit considerations into its procurement process. Doing so will enable the province to choose the most attractive co-benefit initiatives, which also deliver real and substantial GHG reductions. Should the Ministry be committed to embedding non-carbon/co-benefit related factors into protocols, IETA would like to facilitate near-term discussions between MOECC and experts across the global Climate, Community and Biodiversity (CCB) global standards’ community.


Ontario must develop a market framework that will allow offsets, including voluntary offsets, to be generated in a cost-effective manner. A meaningful voluntary carbon offsets market will not be possible if development costs are too high or opportunity too limited. To increase the number of participants in the market, protocols must be economically viable, verification and registry costs must be reasonable, and aggregated project development should be allowed. As demonstrated in existing environmental markets, high transaction costs can cause smaller offset projects to not be developed. Where possible, we encourage the use of conservative, data-driven default values in offset protocols and deployment of the most cost-effective current monitoring technologies and systems.


IETA supports legislative and regulatory efforts to establish a clearly defined, predictable and transparent offsets framework over the long-term. Clear, stable and predictable regulatory language and rules, upon which all compliance and voluntary market participants can base long-term business and investment decisions, is critical. Above all, regulators must avoid introducing uncertainty with unanticipated market design changes. Unexpected offsets program design or protocol changes have adverse impacts on market growth, confidence and Ontario’s ability to achieve its climate goals, including mandated carbon-neutral targets.


Both Ontario’s compliance and voluntary offset programs should be guided by the principle of achieving compatibility with internationally transferable mitigation outcomes (ITMOs) and cooperative approaches. We encourage Ontario to ensure its voluntary program is underpinned by the highest standards and clear guidelines for environmental integrity to ensure that units can eventually be transferable across other programs and in conformance to Article 6 of the Paris Agreement.


We advise the Ministry to leverage IETA member expertise to help Ontario devise a plan for charting a smooth, business-supported voluntary to pre-compliance to compliance trajectory. IETA is well positioned to offer thoughtful guidance to the Ontario government around its efforts to meet its 2018 carbon-neutral compliance obligation by clearly pointing to existing “made-in-Ontario” offset opportunities. Tapping-in to IETA’s deep knowledge of current offset opportunities could also support a type of “early action credit” with regard to the nascent voluntary market.


IETA encourages the MOECC to delegate all, or at least some, of the registry authority to third-party registries to the maximum extent permissible. Enabling voluntary initiatives to register with approved non-government registries – mandated to conduct registration, accept filings, as well as review and settle verification reports – would lend “bench-strength” and overall support to MOECC’s urgent task of oversight and implementation. This includes issuing credits to the market in a timely and efficient manner.


On the voluntary side, MOECC may want to consider pursuing additional measures to encourage the compliance offsets market. For instance, Ontario could contemplate innovative financial mechanisms as a way to provide long-term certainty on carbon value to projects that will qualify under current or future compliance protocols. These could include making long-term commitments to purchase credits to meet internal needs or more sophisticated mechanisms like the World Bank’s Pilot Auction Facility (PAF) , the pilot financial mechanism under consideration in California or The Climate Trust’s Environmental Price Assurance Facilities , all of which provide long-term, financial, minimum-price guarantees to offset projects.



The following provides more detailed technical input on specific sections and questions raised in the Discussion Paper.


Are there additional priorities related to the development of the proposed voluntary carbon offsets program that have not been considered in the Discussion Paper?

To re-iterate, IETA strongly recommends the Ministry prioritize the compliance offset system – including the development of the remaining 12 compliance offset protocols – over the development of Ontario’s voluntary offsets program and encourages using the compliance system for voluntary purposes.

We also emphasize that the primary consideration of Ontario’s voluntary offsets program should be to ensure the integrity of emissions reductions. Reductions must be real, quantified, permanent, additional, net of leakage, verified by a competent and independent third party and used only once. Incorporating other factors, as Ontario’s proposed program does, risks compromising on the climate integrity of offset projects. As such, we advise buyers, like the Ontario government, to use portfolio purchasing criteria to aggregate the desired mix of other co-benefits.


In addition to the five program objectives listed in the MOECC Discussion Paper, are there other objectives the Ministry should consider?

In regard to the Discussion Paper’s (5) stated voluntary market program objectives, the Ministry should consider the following:

•“Driving Innovation” as an Objective: The objective to drive innovation in GHG mitigation should be a key criterion for selecting project types to recognize. Doing so would not only allow the voluntary program to serve as a testing ground for new offset protocols that recognize innovative mitigation measures but could also support Ontario-based technology/solution providers and create jobs. Moreover, it would minimize conflicting interests with the compliance program that arise when voluntary projects exist for the same project categories as the compliance protocols and the eligibility criteria and scope for both are determined simultaneously by the government.

•Revisit “Resilient Communities” and “Community Based” as Objectives: We recommend the Ministry consider removing “Resilient Communities” and “Community Based” as program objectives. “Resilient Communities” may be a poor fit for voluntary offset generation at the prices the Province contemplates paying. As an example, Pacific Carbon Trust in British Columbia had several of these types of projects it wanted to fund, but later found them too expensive per tonne to support. While “Community Based” projects have potential, the concept appears improperly applied. More specifically, if “government, private sector and others reduce both their carbon and ecological footprints” via a project, the project would not be eligible to sell those reductions as offsets.


Are there specific barriers to participation in the carbon market that the Ministry should consider when developing the proposed Ontario voluntary carbon offsets program?

When developing the proposed Ontario voluntary carbon offsets program, the Ministry should identify and act to avoid/dismantle the following barriers to participation:

•Uncertain Size of Voluntary Program: The volume of voluntary offsets the Ontario Government plans to procure – even high-level estimates – are extremely relevant to understanding potential barriers to participation. As such, these demand-side estimates should be publicly shared as soon as possible. Government officials have informally indicated volumes in the order of 200,000 tCO2e a year. Volumes of this magnitude, even if complimented by a significant increase in voluntary offset procurement from the private sector, are insufficient to sustain a healthy voluntary market. In particular, this scenario becomes ineffective should the Government choose to develop and employ its own rules and protocols that fail to align (or enable fungibility) with other voluntary markets. In addition to providing information on Ontario’s demand, the Ministry could address this barrier by following widely accepted standards that enable offsets to be used outside of the province.

•Economics of Smaller Projects: To ensure sound economics for smaller projects, the Ministry allow for project aggregation. In addition to reducing transaction costs, additionality has several key benefits: enabling geographically and temporally dispersed reductions; lowering the risk to aggregators and their financiers; facilitating new and innovative methods for quantifying offsets; and preventing commercially sensitive information from being tied to a specific producer or field.

•Complex Requirements: While the complexity of requirements could present barriers, rigor must be maintained. We recommend that Ontario’s requirements follow established and widely accepted practices to achieve rigor without undue complexity.

•High Administrative Costs: The program should seek to minimize administrative burdens and costs for participants. High transaction costs could result in economically inefficient projects and therefore a lack of available offset credits.

•Political Uncertainty & Considerations: The political uncertainty related to the continuity of the program (with an upcoming provincial election) as well as the lack of a competitive market in a program dominated by one government buyer make it likely that project developers will pursue a recognized voluntary standard with a broader market over an Ontario-specific one.

•Sequestration Projects Involving Reforestation or Afforestation: In sequestration projects involving reforestation or afforestation, the length of time to grow biomass and reduce emissions makes such projects financially unrewarding for project owners. The fact there is not a single reforestation or afforestation project using the California Forest Carbon protocol is proof of the lack of financial incentive. A voluntary program with less robust pricing and more concentrated demand will not achieve a different outcome.

•Small Landowners & Sequestration Projects: The inability to aggregate small-scale sequestration projects that require joint and multiple long-term commitments can pose a significant barrier for smaller landowners. Engaging smaller landowners in sequestration projects will require protocol rules that accommodate individual commitments within a project aggregation and allow for reversals of individual initiatives without impacting other initiative proponents within the aggregation.


What is the best way for the Ministry to facilitate community participation in the proposed Ontario voluntary carbon offsets program?

IETA strongly supports Ontario’s intention to facilitate participation from communities and municipalities to increase resilience. There are several ways the Ministry can effectively facilitate community participation in the proposed Ontario voluntary carbon offsets program:

•Conducting Education & Outreach Efforts: We encourage the Ministry to conduct education and outreach on potential offset opportunities.

•Enabling Small-Scale Aggregation: As touched on in Section 2.0 (Detailed Comments), we recommend the Ministry provide an efficient mechanism for small-scale aggregation that unlocks the offset project potential for family farms, small- to medium-sized woodlot owners, municipalities and community organizations.

•Reporting on the UN SDGs: The Ministry may consider asking proponents to document their project’s potential contributions to United Nations Sustainable Development Goals (UN SDGs). Doing so could create a way for projects to demonstrate their engagement with Indigenous organizations. For example, reporting against SDG #16 (Peace, Justice and Strong Institutions)’s Indicator 16.7 to “ensure responsive, inclusive, participatory and representative decision-making at all levels” could help projects engage Indigenous communities by enabling them to report on these efforts.


What environmental co-benefits (e.g., flood management) should be prioritized in the proposed Ontario voluntary carbon offsets program?

While IETA supports the government’s intention to promote environmental co-benefits, we strongly advise the government against directly incorporating them in the carbon offset methodologies themselves. Not only would rewriting methodologies to incorporate co-benefits be too complicated and costly an exercise, particularly across project types and geographies, it is also likely to limit the project options available to developers.

Environmental and social co-benefits are often bespoke, do not fit within a rigid framework and can be difficult to quantify in a manner that allows for a straightforward valuation. For all of these reasons, we once again encourage the Ontario government to prioritize the purchase of high co-benefit offsets by defining broad procurement criteria at the program level while avoiding prescriptive measures and protocol-specific criteria. For this type of procurement criteria exercise, additional co-benefits to consider include resilience, water quality, water quantity, soil health, habitat restoration/preservation, job creation and economic development.

Another less intrusive option than incorporating co-benefits in offset protocols is to require projects to document their contributions to the UN SDGs. Documenting progress toward SDGs in Ontario’s voluntary carbon offsets program could support international efforts in achieving such goals.


What project types should be a priority for the Ontario voluntary carbon offsets program?

IETA does not recommend prioritizing project types. Doing so could hinder innovation of new reduction or removal opportunities. Rather than prioritize specific project types, we recommend: 1) approving existing GHG crediting programs that meet a set of quality criteria and have developed protocols that could readily transition into compliance protocols in the future; and 2) encouraging the development of new protocols by offset developers. These include protocols that use an activity method of additionality assessment, such as a positive list, to be consistent with existing compliance protocols.

Further, Ontario should aim to expedite and approve new offset protocols that provide a pathway for innovative GHG mitigation measures. Examples of such protocols include, but are not limited to: product substitution protocol that recognizes the lower lifecycle GHG emissions of one product relative to the common-practice alternative when employed; programmatic improved forest management for small-scale woodlot owners; nutrient-enhanced sequestration in forests; wetlands avoided conversion and restoration; Short-Lived Climate Pollutant (SLCP) measures with near-term impacts on GHGs; and advanced refrigeration systems for refrigerants that are not yet covered in the compliance protocol.


What actions can the Ministry take to support viable end markets for Ontario voluntary credits?

IETA commends the Ministry’s efforts to consider demand-side aspects when designing its voluntary program as measures that encourage, recognize and reward voluntary action are both a rational and necessary step to realizing the full potential of voluntary action. Action driven by philanthropy and corporate responsibility alone is constrained by a corporate’s responsibility to direct its capital to investments providing a clear economic return. Voluntary action requires a clear and transparent business case if it is to be fully integrated into corporate strategy, operations and investment decisions.

There are several actions the Ministry can take to support viable end markets for Ontario voluntary carbon offset credits:

•Provide tax incentives to end users who offset their emissions using eligible credits (e.g., ensuring sales of emissions offsets are exempt from sales tax).

•Use existing market-accepted protocols and registries. Private sector buyers have demonstrated confidence in these existing standards and infrastructure. This will also enable the acceptance of Ontario offsets outside the province.

•Create and utilize standard, multi-year offset purchase contracts and provide clarity on annual volumes as soon as possible. This will result in a significant benefit to the market and maximize the development of high-quality offsets, as organizations with viable projects will anticipate a return on investment.

•Formally recognizing carbon neutrality claims made by end users of the Ontario voluntary carbon market. For example, end users (e.g., companies, buildings) of credits under Australia’s National Carbon Offset Standard can be certified as carbon-neutral by the government, which corporations have found to be very helpful.


Are there existing standards or methodologies the Ministry should consider when developing requirements for the creation of carbon offsets projects?

In creating an Ontario voluntary carbon offsets market, the Ministry should look to leverage the knowledge and infrastructure of existing international standards and methodologies. Relying on current GHG crediting programs to generate offsets for the Ontario voluntary carbon market not only avoids reinventing the wheel but also enables the program to get underway immediately, given that existing programs offer ready-to-use platforms for driving investments in carbon offset projects. Moreover, it creates an important buffer between the Ontario government and the offset development process.

As much as possible and is practical, we highly recommend that Ontario – poised as the main near-term purchaser of issued credits – avoid in-house protocol development/adaptation for the voluntary program. Taking all, or even partial, protocol development in-house carries several risks that must be flagged (flagged below). We urge the government to follow the pathway, laid out on Page 10 of the MOECC’s Discussion Paper, to designing existing standards and methodologies for use in the program.

IETA’s key rationale for this strong recommendation is summarized below.

•Timeliness: Requiring new protocols and methodologies will make it unlikely, if not impossible, for existing offset holders to sell to the government. This purchase of existing offsets should not be the primary path for the Government to reach carbon neutrality, but – given the reality that carbon neutrality is mandated in 2018 – large purchases of existing offsets will naturally be required. MOECC has been working on adapting offset protocols for the compliance market for nearly two years and, during this time, only one (i.e., LFG) has been completed. Architects of the voluntary market would need to show evidence that they can avoid that fate, were they to take on protocol development.

•Protocol & Methodology Quality: It is unlikely that the MOECC, or any prospective contractors, will be in a position to produce better quality offset protocols and methodologies than those who currently participate across the range and breadth of voluntary offset markets. For well over a decade, experts both in Canada and internationally have not only been developing but also fine-tuning protocols and methodologies to the standards listed on Page 10 of the MOECC Discussion Paper.

•Reputational Risk & Conflict of Interest: Even the best-designed and most rigorously operated offset systems come with potential reputational risks. This is particularly true for offset programs under heightened scrutiny where taxpayer money is used to purchase reductions. The Ontario government opens itself up to future attacks if the public sector is both writing the protocols and purchasing the offsets. As such, we highly recommend an arms-length situation be created to protect against these future scenarios. The use of externally developed protocols is an important component of avoiding future reputational risk and ensuring long-term public support for Ontario’s carbon market and carbon-neutral mandate.


In determining how offset crediting programs are selected, we recommend that Ontario leverage the work of the International Carbon Reduction and Offset Alliance (ICROA). The international voluntary industry group – and IETA affiliate – has already undergone an extensive exercise to assess multiple crediting programs to help determine those aligned with their quality criteria. Given ICROA’s attention to detail and thorough process, this represents a low-risk strategy that would enable Ontario to set up a voluntary carbon market quite quickly and efficiently.

For all organizations committed to voluntary action, the integrity of, and recognition for, their actions is of paramount concern. Proponents must establish and support governance arrangements that ensure the quality, transparency and integrity of voluntary action. The voluntary carbon market has developed requirements and systems that ensure the integrity of units.

Specifically, ICROA has developed a Code of Best Practice that aims to define international best practice for offset-inclusive carbon management and represents the minimum requirements its members must meet. ICROA members commit to use carbon credits that are or will be validated, verified and registered under the standards that Ontario will consider to inform its voluntary carbon offsets program, namely the Climate Action Reserve (CAR), the American Carbon Registry (ACR), the Verified Carbon Standard (VCS) and the Gold Standard.



Once again, IETA applauds the Ontario government in working to develop an effective voluntary offsets system as a key component of efforts to tackle climate change. Offsets play a critical role in providing the greatest climate benefits in the least time for a given expenditure of social resources, thereby eliminating GHG emissions as efficiently as possible. The Ministry’s support for a robust voluntary carbon market in Ontario enables the business community and others to play meaningful roles in achieving real emissions reductions while also delivering critical benefits to realize sustainable future communities and economies.

IETA looks forward to future engagement with the Ministry, as Ontario moves forward with the design and implementation of its voluntary carbon offsets program. If you have questions or follow-up related to our submission, contact Katie Sullivan, IETA Managing Director, at



1. MOECC Discussion Paper. Page 1.…
2. Description of Policy.…
3. Premier’s 2016 Mandate Letter: Environment and Climate Change.…
4. ICROA & IETA. Enlisting Government Support for Voluntary Carbon Management & Offsetting to Scale & Accelerate Climate Action. Page 17.
5. MOECC Discussion Paper. Page 14.…
6. MOECC Discussion Paper. Page 14.…
7. World Bank Group. Pilot Auction Facility.
8. California Air Resources Board. SB 1383 Pilot Financial Mechanism. 26 June 2017.
9. The Climate Trust. Environmental Price Assurance Facility.
10. MOECC Discussion Paper. Page 8.…
11. Viresco Solutions. Enabling Offsets at Scale in Ontario’s Agricultural Sector. December 2015.…

[Original Comment ID: 211995]