On April 29, 2025, Mark Carney led Canada’s Liberal Party to a narrow electoral victory, securing a fourth consecutive term for the party. Carney, a former central banker and UN Special Envoy for Climate Action and Finance, now leads Canada’s climate policy.
Carney is now tasked with an urgent balancing act: easing economic pressures while advancing ambitious climate goals — at a time when both inflation and demand for climate action are rising.
Reforming Carbon Pricing: From Consumer Tax to Industrial Focus
One of Carney’s first actions as Prime Minister was to scrap the consumer carbon tax. This tax, introduced in 2019, grew unpopular as living costs rose. The tax, which was set to reach $170 per tonne by 2030, was repealed in an effort to alleviate financial burdens on households.
After its removal, gasoline prices in Canada fell sharply. Average gasoline prices dropped by 8–12 cents per liter nationwide. Some provinces saw drops of more than 10 cents per liter. Many Canadians welcomed this immediate relief. This was especially true in areas where energy costs make up a large part of household expenses.
Carney suggests replacing the consumer tax. He wants to encourage greener choices for consumers and improve carbon pricing for industries. This plan maintains output-based pricing for big polluters. It also adds subsidies for electric vehicles and home upgrades.
The output-based pricing system (OBPS) aims to hold high-emission industries accountable. It also gives flexibility to sectors that face international competition or are trade-exposed.
It uses the same carbon price as the old consumer tax — $65 per tonne of CO₂ now, rising to $170 per tonne by 2030. Instead of charging companies for every tonne of emissions, the government sets performance targets based on how much pollution is normal for their industry.
If a company pollutes more than its target, it must buy carbon credits or pay the carbon price. If it pollutes less, it earns credits that it can sell. This system lets industries avoid paying the full carbon price on all their emissions, but still pushes them to be more efficient.
The government is targeting industrial emitters. This plan focuses on the biggest sources of greenhouse gases. It also reduces the financial burden on everyday Canadians.
Carney’s plan also includes robust support for green technology adoption. Subsidies for electric vehicles help speed up the shift to cleaner transport. Incentives for home retrofits promote energy efficiency and reduce emissions in homes. These efforts include public awareness campaigns. They aim to help Canadians make smart choices about energy use and their carbon footprint.
Carney’s shift to industrial carbon pricing is complemented by a new international trade tool — the Carbon Border Adjustment Mechanism (CBAM).
Introducing the Carbon Border Adjustment Mechanism
Carney wants to tackle carbon leakage and stay competitive, and thus, he plans to implement the CBAM. This policy would set tariffs on imports from countries with weaker carbon rules. Thus, it encourages global emission cuts and helps protect local industries.
The CBAM helps Canadian manufacturers compete better. Without it, they may have higher costs from local climate policies than their international rivals.
The introduction of the CBAM marks a significant shift in Canada’s approach to climate policy. Carney’s government wants to align trade policy with climate goals. This way, it can encourage other countries to improve their carbon rules. This approach shows global trends. The European Union and other regions are moving toward similar systems.
However, implementing the CBAM needs careful coordination with trading partners. It must also follow World Trade Organization rules to prevent disputes.
Balancing Energy Development and Environmental Goals
Carney envisions Canada as a leader in both clean and conventional energy sectors. His administration wants to create a national energy corridor to help share energy resources across the country. It will also cut dependence on the United States and boost energy security.
The new corridor will help move electricity, oil, and natural gas more efficiently. This way, provinces can share resources and take advantage of their strengths in energy production.
While promoting clean energy investments, Carney also acknowledges the role of traditional energy sources in Canada’s economy. Oil and gas are key to GDP and jobs, especially in Alberta and Saskatchewan.
Carney stresses the need to work together with provinces, territories, and Indigenous communities. This teamwork is key for energy projects that support both environmental and economic goals. This involves helping to build renewable energy systems like wind and solar. It also ensures that current industries can shift to lower-carbon operations.
The government’s approach is practical. It knows that quickly moving away from fossil fuels might hurt the economy. Instead, Carney advocates for a gradual transition, supported by investment in innovation and skills development to prepare workers for the jobs of the future.
The Global Stage Awaits — Can Canada Deliver?
Although Canada accounts for roughly 1.5% of global emissions, its advanced economy and resource wealth position it as a key player in shaping international climate policy.
Carney has extensive experience in global finance and climate advocacy. This enables him to play a significant role in international climate discussions. As a former Governor of the Bank of England and the Bank of Canada, he brings credibility and expertise to the global stage.
Canada will play a bigger role in groups like the UNFCCC and the G7. It will push for teamwork on carbon pricing, sustainable finance, and climate adaptation.
However, Carney faces challenges at home. He must work with a minority government and tackle regional gaps in support for climate policies. Provinces that depend on fossil fuels might oppose federal plans. This means they need to negotiate carefully and design policies that help everyone meet emission reduction goals.
Canada has promised to cut its greenhouse gas emissions by 40–45% below 2005 levels by 2030 as part of the Paris Agreement. The country also aims to reach net-zero emissions by 2050.
The Canadian Climate Institute estimated that the carbon tax would have helped lower emissions by 8–9% by 2030. The carbon tax applies to emissions from transportation and buildings. On the other hand, the industrial carbon pricing systems could cut around 20-48% of emissions by 2030, as shown below.
Even though the tax on consumers is gone, government rebates for electric vehicles and home upgrades will still help reduce emissions in these areas. Without the tax, Canada will need new policies to stay on track, and Carney’s administration will be on it.
Carney’s Climate Balancing Act
Public opinion remains divided. Some Canadians prioritize economic growth and energy affordability; others demand more ambitious climate action.
Prime Minister Mark Carney’s challenge will be to bridge these divides. He needs to show that environmental responsibility and economic prosperity can go hand in hand.
Carney’s climate strategy reflects a pragmatic approach: balancing the need for economic stability with environmental responsibility. Carney wants to shift Canada from consumer-based carbon pricing to industrial regulation and international methods like the CBAM. This change aims to make the country a strong and innovative leader in global climate efforts.
As Canada works to reach its climate goals, the world will be watching. If successful, Carney’s balanced approach could offer a model for nations seeking both economic resilience and climate leadership.
The post Mark Carney’s Climate Strategy: Balancing Carbon Policy, Trade, and Energy Security appeared first on Carbon Credits.
The accounting differences that decide whether your nature investment shows up in inventory, in BVCM, or nowhere at all.
The question reaches a procurement team about three weeks before the next sustainability committee meeting. Someone has read about insetting. Someone else has just signed off on an offset purchase. The CSO wants to know if the two are interchangeable. The answer is no, and the GHG Protocol Land Sector and Removals Standard is the reason why.
This article walks through what each term means at audit-grade specificity, what the standards actually say about how each gets counted, and how to decide which tool fits which target. The insetting vs offsetting question is one of the most-searched in corporate climate strategy, and one of the most poorly answered. By the end of this piece, you should be able to brief a committee on the difference without notes.
The two definitions, in plain English
Offsetting means buying carbon credits generated outside your value chain and retiring them against your residual emissions. The reduction happens somewhere else, financed by you, and the credit is the receipt.
Insetting means investing in emission reductions or removals inside your own value chain, typically with suppliers, where the reduction is directly linked to the products and services you buy. The reduction happens inside the boundary of your Scope 3 inventory, and the accounting treatment is fundamentally different.
The shorthand from the University of Oxford’s Nature-based Insetting Initiative is useful: insetting is what you do with the supply chain you have; offsetting is what you do with the supply chain you do not have.
What the GHG Protocol Land Sector Standard actually says
The GHG Protocol Land Sector and Removals Standard, finalised in 2024 after a multi-year pilot, sets the rules for how land-based emission reductions and removals enter corporate inventories. The Standard distinguishes between inventory accounting (Scope 1, 2, and 3) and project or intervention accounting (a separate methodology for crediting).
For insetting, the practical implication is that supplier-level interventions, when properly measured and attributed, can reduce your Scope 3 category 1 (purchased goods and services) emissions in your inventory. The reduction is not a credit retired against the inventory; it is a lower inventory number, period.
For offsetting, the credit is retired separately. It can be reported as a contribution toward a net-zero claim under the SBTi Beyond Value Chain Mitigation framework or as part of a VCMI Carbon Integrity claim, but it does not lower the inventory number.
A practical consequence: if your Science Based Target requires a 50% absolute reduction in Scope 3 emissions by 2030, insetting moves you toward the target. Offsetting does not. This single point of difference reshapes the procurement decision.
When insetting counts toward Scope 3 (and when it does not)
Insetting counts toward Scope 3 only when several conditions are met:
- The intervention must occur with an entity in your value chain.
- The emissions reduction or removal must be measured against a defensible baseline.
- The reduction must be attributed to your share of that supplier’s output, not double-counted with other buyers.
- It must follow the inventory accounting rules in the GHG Protocol Land Sector Standard, not the project accounting rules used to generate credits.
The most common failure mode is double counting. If your supplier sells the same reduction as a credit on the voluntary market and also reports it to you as a Scope 3 reduction, the math breaks. The Standard requires you to address this risk, typically by purchasing and retiring the supplier-issued credit as part of your inventory or by contractual provisions that prevent the supplier from selling the reduction twice.
When insetting does not count toward Scope 3: when the intervention sits with a supplier you do not buy from, when the baseline is not defensible, when the attribution is unclear, or when the documentation does not survive audit. Those cases default to Beyond Value Chain Mitigation, which is still useful but operates on a different ledger.
The procurement and supplier engagement question
Insetting is harder than offsetting. That is the unfashionable truth most buyers eventually confront. Offsetting is a transaction; insetting is a relationship.
To run an insetting program, you need supplier mapping precise enough to know which farms or facilities sit at which Scope 3 boundary. You need an engagement model that gets suppliers to participate, which usually requires multi-year commitments and shared economics. You need an MRV architecture that measures the right things and produces audit-ready documentation. And you need a contractual structure that prevents double counting and protects both sides.
The trade-off you receive in return is significant. Reductions count against your inventory rather than your residual. Supplier relationships deepen, which protects sourcing continuity. Yield and quality improvements often follow regenerative interventions, which reduces your input cost over time. And the regulatory file, under CSRD, CSDDD, EUDR, and the SBTi FLAG Guidance, is materially stronger.
Choosing the right tool for the right target
A practical decision rule. If your target is a science-based Scope 3 reduction and you operate in a FLAG sector or source FLAG commodities, insetting is the structurally correct tool. If your target is a net-zero claim that includes neutralising hard-to-abate residual emissions outside your value chain, BVCM via high-integrity offsets is the structurally correct tool. Most companies with material Scope 3 exposure need both, in different proportions, sequenced over time.
The sequencing matters. Insetting takes longer to stand up but produces a permanent reduction in the inventory. Offsetting can be transacted faster but does not change the inventory and now sits under tighter claim restrictions. Treat them as complementary tools with different jobs, not as substitutes. The Accountability Framework Initiative and the IUCN Global Standard for Nature-based Solutions both provide useful guardrails for the insetting side, with biodiversity, human rights, and benefit-sharing requirements that go beyond carbon math.
If you are mapping a Scope 3 reduction roadmap and need to scope which interventions count toward your inventory versus which sit in Beyond Value Chain Mitigation, the carbon and sustainability experts at Carbon Credit Capital can help you structure a nature-based supply chain investment program that fits your FLAG exposure, your target architecture, and your audit horizon. Schedule a consultation.
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