What's Canada's bold plan to turbocharge climate action?
Canada is developing a new framework to allow its companies to participate in international carbon markets. This move, focusing on Internationally Transferred Mitigation Outcomes (ITMOs), aims to attract vital investment into Canadian climate projects and boost demand for carbon removal and nature-based solutions. By enabling global trade in emissions reductions, Canada seeks to accelerate its journey towards net-zero targets while strengthening its role in the global clean economy. This initiative underscores the urgency of climate action, providing a pathway to finance critical environmental efforts.
Canada is exploring a new framework to let its companies trade "Internationally Transferred Mitigation Outcomes," or ITMOs. This federal initiative aims to attract significant investment into Canadian climate projects, boosting demand for carbon removal and nature-based solutions. It's a strategic step as global carbon markets grow under the Paris Agreement, helping countries find new ways to fund emissions reductions and removals to reach net-zero goals. With vast natural resources, geological storage, and clean electricity, Canada is well-positioned for this global climate effort.
Despite these advantages, Canada still faces a major challenge in cutting emissions. In 2024, the country released about 685 million metric tons of greenhouse gases. While electricity emissions have dropped sharply, the oil and gas sector remains a large source. Achieving Canada's climate targets will require strong emissions reductions combined with innovative carbon removal solutions, and international markets can provide crucial funding.
ITMOs allow one country to transfer verified emissions reductions or removals to another, which can then count them towards its climate targets. This global cooperation, under Article 6.2 of the Paris Agreement, ensures climate efforts are accurately tracked and prevents double counting. Canada's framework will set domestic rules, upholding strict environmental integrity, meaning projects must genuinely reduce emissions and be independently verified.
The timing for this is opportune, as international carbon markets are expanding rapidly. The World Bank reports 87 carbon-pricing policies worldwide, covering nearly 30% of global emissions and generating over $107 billion in revenue in 2025. Annual capital for future carbon-credit projects reached up to $16 billion in 2025. This growing market offers a huge opportunity for nations providing reliable climate solutions.
Carbon removal, taking CO₂ directly from the atmosphere, is a key area for Canada. Carbon Removal Canada estimates a thriving domestic industry could add $78 billion to Canada's economy and create 300,000 jobs by 2050. Canada’s geological formations, clean energy, and skilled workforce make it ideal for leading in technologies like direct air capture.
This proposed ITMO framework could directly finance project developers. A Canadian project that reduces emissions or removes carbon could generate an ITMO, get authorization, and sell it internationally. This revenue would help fund the project, improving its viability, especially for newer technologies. Nature-based solutions could also benefit, provided they meet strict requirements. This robust system ensures impactful climate action.
Canada's Minister of the Environment, Climate Change and Nature, Julie Dabrusin, highlighted that ITMO trading can accelerate global climate action by simplifying emissions reduction transfers. She emphasized it's about "turning our natural advantages and homegrown climate innovation into investment, good jobs, and new export opportunities," bolstering Canada's clean economy leadership. This aligns with Canada's over $13 billion commitment to international climate finance.
Ultimately, this framework aims to connect Canadian climate projects and technologies with global funding and demand. While under development, its final rules will determine project eligibility. Canada is balancing market access with strong accounting and environmental safeguards. If successful, this framework could be a powerful new avenue for Canadian carbon removal, clean technology, and nature-based initiatives in the expanding international market for emissions reductions.