Canada carbon markets, carbon removal and international carbon credits are moving closer to the center of Ottawa’s strategy to develop new clean-economy industries and expand Canada’s role in international climate markets. The federal government said Thursday it is exploring a policy framework that could allow Canadian companies to participate in international carbon markets by trading internationally transferred mitigation outcomes, or ITMOs, under Article 6 of the Paris Agreement.
The move could give Canadian carbon removal developers and other climate-focused companies access to a broader pool of international buyers and capital. Ottawa said the framework could support investment in emissions reductions, carbon removal technologies and nature-based solutions, while creating opportunities to export Canadian technology and expertise.
Environment Minister Julie Dabrusin said the proposed framework could channel investment into emissions-reduction and carbon-removal projects in Canada, as well as nature-based solutions.
“The trading of ITMOs (International Transferred Mitigation Outcome) under the Paris Agreement can unlock greater global climate action by making it easier to transfer emission reductions and removals between countries. This is about turning our natural advantages and homegrown climate innovation into investment, good jobs, and new export opportunities. A clear framework for international carbon credit transfers can help Canadian companies scale, attract capital, and bring more innovative technologies to market, strengthening our position as a leader in the global clean economy,” she stated.
Ottawa looks to international carbon trading
The announcement also comes as Canada looks to build on its industrial capabilities, clean electricity resources and geological capacity for carbon storage. The federal government said those advantages could help establish a globally competitive carbon removal industry, while international market access could give Canadian companies another route to commercialize projects and attract investment.
“We’ve spent the past year making the case that Canada needs this to compete internationally, and we’re glad to see it move forward,” said Na’im Merchant, Executive Director, Carbon Removal Canada. “This is a step we and many others in the sector have been encouraging for some time, and we thank officials across government who engaged directly. The Minister’s comments this morning, and the consultation’s recognition of the carbon removal sector’s role, show that this government sees these technologies as critical to a climate-competitive future and as a major export opportunity.”
The government also said any system would have to comply with Article 6 requirements, including rules intended to prevent the same emissions reduction from being counted by both countries.
The announcement comes as Canada looks to capitalize on its clean electricity, industrial capabilities, natural resources and geological storage potential. Ottawa said a functioning international market could help Canadian companies attract capital, commercialize technologies and sell climate-related products and expertise abroad.
Article 6.2 allows countries to cooperate through bilateral or multilateral arrangements and transfer ITMOs toward national climate targets. The UN climate body says those transactions require accounting and reporting arrangements designed to maintain transparency and environmental integrity.
Carbon removal industry sees export opportunity
International industry groups said clearer access to international markets could provide an important demand signal for a young Canadian sector.
“We applaud the Government of Canada for expanding the role of international cooperation in its climate and competitiveness strategy. Diversifying exports to include carbon dioxide removal credits benefits Canada, its trading partners, and the global climate.
Carbon Business Council’s Canadian coalition members have identified roughly C$900 million in potential carbon removal credit sales waiting on a clear pathway to export to the international market. With strong rules on environmental integrity and delivery, Canada can convert this global investment opportunity into durable removal projects, skilled jobs, and economic growth in communities across the country.” said Melissa Hillier, Associate Director of Policy at the Carbon Business Council.
Canada has already been building domestic policy support for carbon removal. Carbon Removal Canada estimates that a scaled industry could generate $78 billion in annual GDP gains and support 300,000 jobs by 2050, although such figures are projections rather than guaranteed outcomes.
A broader push to connect Canada’s carbon markets
The announcement follows a Sept. 21 report from the International Emissions Trading Association, or IETA, that outlined a broader vision for Canada’s carbon markets.
In its paper, “Canada’s Carbon Market Opportunity: A Vision for Climate Competitiveness & Growth“, IETA argues that Canada can strengthen its position in international carbon markets by first improving connections among its domestic systems. The group points to greater interoperability, fungibility and linkage among Canadian carbon markets as part of that effort.
The report then links a more integrated domestic market to international opportunities. IETA specifically highlights Article 6 cooperation, carbon accounting, low-carbon product markets and strategic carbon-market partnerships as areas where Canada could expand its international participation. It also argues that better coordination could reduce compliance costs, improve investment certainty and help attract capital to low-carbon industries.
That makes the federal announcement significant beyond the potential trading of individual credits. The ITMO framework under consideration could become one component of a broader effort to connect Canada’s domestic carbon-market infrastructure with growing international demand for emissions reductions and removals.
Companies see potential for a new export industry
Deep Sky CEO Alex Petre said the announcement could help establish carbon removal as an emerging Canadian industry.
“Today is a clear sign about the next industry that will help build Canada’s economy: carbon removal. We have abundant clean power, deep industrial expertise and geology with vast capacity to permanently store CO2.
Today’s commitment from the federal government can help turn those advantages into a strong export opportunity, connecting Canadian projects with growing demand, particularly in Europe and Asia, as international carbon markets and industrial decarbonization obligations continue to grow. At Deep Sky, we have been building this industry here, and clearer access to international markets gives us an even stronger foundation to keep building and scaling in Canada.”
The government has not yet established a final trading system. It said consultations with provinces, territories, Indigenous organizations and other stakeholders will help determine how ITMOs could operate in Canada.
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