Directive on the Eligibility of Carbon Credits for International Development Assistance

Section 1: Purpose

The purpose of the Directive on the Eligibility of Carbon Credits is to provide guidance on eligible expenses and on the eligibility criteria for recipient organizations in the context of projects funded through Global Affairs Canada (GAC) International Development Assistance (IDA).

Section 2: Application and effective date

The Directive is effective as of August 1, 2023, and applies to all new IDA grant and contribution agreements signed by GAC on or after this date.
For all grant and contribution agreements signed before August 1, 2023, the Directive applies provided that the carbon credit costs do not lead to an increase in the budget’s travel section that exceeds the flexibility indicated in the approved agreement/arrangement.

Section 3: Amendments

GAC may amend the Directive’s provisions at any time as a result of changes in GAC policies and/or procedures. Advance notice of 30 days will be given to organizations that have an active agreement with GAC.

Section 4: General rules

Consistency: This Directive should be applied consistently across all GAC-funded projects.

Integrity: Claimed expenses must cover expenses actually incurred, they must be reasonable and in accordance with the terms and conditions of the GAC grant and/or contribution agreement, and they must meet the requirements outlined in this Directive.

Reciprocity: The organization is encouraged to develop an internal policy to reduce greenhouse gas (GHG) emissions and develop an internal budget envelope to purchase carbon credits for projects that are not funded through GAC’s IDA.

Value for money: The organization must establish procedures and processes for the procurement of carbon credits that are documented and transparent in order to ensure cost-competitiveness.

Prioritizing alternatives: The organization must contribute to reducing GHG emissions relating to air travel by prioritizing virtual meetings and choosing travel by bus and/or train for short distances when possible and appropriate, depending on the project.

Section 5: Eligibility and criteria

Carbon credits are only eligible for air travel for eligible activities in the context of projects funded through GAC’s IDA.

Carbon credits are eligible only if the following three conditions are met:

• The credit must be issued by an organization that is certified by one of the four international standards below, or any other that has been previously authorized by the Department:
• Gold Standard
• Clean Development Mechanism
• CSA
• Plan Vivo
• The credit must be identifiable, verifiable and auditable for the duration of the life of the project and for 3 years following the end of the project stipulated in the agreement.
• The credit must be purchased at the most economical price on the market to offset GHG emissions for travel that has actually taken place.

Notice: Organizations must procure carbon credits from registered organizations and/or where the offset activities are carried out in a country that is eligible for IDA, with a preference for the developing country where project activities are carried out.

Remarks

• Organizations may purchase carbon credits through the airline if this meets the three eligibility conditions in section 5.
• Costs associated with the carbon credits must be indicated separately in the budget under the budget line item for travel.
• All efforts to reduce GHG emissions made by the organization must be indicated in the environment section of the activity reports and the annual results.
• The annual purchase of carbon credits by organizations is permitted solely for emissions produced and accounted for during the year. Purchase of credits for future emissions is not permitted.