The action will enable Canadian project developers to access the international carbon market through a platform that is widely respected for ensuring environmental integrity and providing a high degree of transparency.

Prior to this action, projects in Canada wanting to issue VCUs had to demonstrate that the units
would not be double counted, which can occur when a project in a Kyoto Protocol Annex B
country sells emission reductions and thus ‘frees up’ AAUs that the government can then sell.

The VCS Board concluded that this requirement is not applicable to Canada because there is no
regulatory framework to implement the Kyoto Protocol, none is likely to emerge, and the
country is unlikely to achieve its Kyoto Protocol reduction commitment. Therefore,
implementing GHG emission reduction or removal projects in Canada will not result in double
counting vis‐à‐vis the country’s Kyoto Protocol reduction commitment.

The action will enable the development of project activities throughout Canada under a single
platform that ensures environmental integrity and transparency. With the ability to use the VCS
and issue VCUs, developers across Canada can now use a framework that provides for clear
additionality and baseline setting requirements, as well as the other criteria that make the VCS
a globally respected standard. Additionally, both buyers and sellers will benefit from being able
to use the VCS registry system to track their VCUs.

The VCS Board’s decision follows a submission from Bennett Jones, a Canadian law firm that is
active in climate change issues on a wide range of topics, including carbon trading, carbon
finance, climate change risk management and regulatory compliance.

David Antonioli, CEO of the VCSA says: “This decision will strengthen investment in activities
that reduce emissions in Canada. With both the scope and the infrastructure the VCS provides,
Canadian project developers now have a platform they can rely on to generate and track a wide
range of high quality emission reductions and removals.”

Andrei Marcu from Bennett Jones says: “Today's decision by the VCS Board will provide strong
incentives to implement greenhouse gas reduction and removal projects in Canada by
providing access to the global carbon finance market, where the VCS is a key standard. We are
proud to have contributed to this outcome, which also emphasizes the real contribution that
the VCS is making in setting new standards for transparency and responsiveness.”

Keith Driver, VP of Operations at Blue Source Canada says: “Having been involved in the development of the Canadian carbon markets since 2003, Blue Source is pleased to see that we can now access the VCS for our projects across Canada. Under the VCS, these projects gain an added level of recognition, assurance and commercial value in the growing voluntary and precompliance markets.”

The VCS Board’s decision regarding Canada followed a two step process. First, the Board agreed to criteria it would use to inform rulings on whether double counting is likely in certain situations or jurisdictions, and therefore whether the requirements set out under Section 5.2.2 of the VCS 2007.1 are applicable. The criteria the VCS Board agreed to use are:

• The existence of enforceable regulation to meet a binding limit on GHG emissions, such
as the implementation of a national or relevant sectoral cap and emissions trading
program;

• The extent to which the host country is adrift of any binding limit on GHG emissions;

• The existence of sufficient political will in the host country to comply with any binding
limit on GHG emissions, including policies and regulation such as national or relevant
sectoral cap and emissions trade program; and

• Any other factors relevant to the specific situation.

Once the criteria were approved, the Board ruled unanimously that the requirements with
respect to double counting set out in Section 5.2.2 of the VCS 2007.1 are not applicable to
projects in Canada. The ruling is effective immediately (23 July 2009).

If and when the VCS Board’s assessment of the situation in Canada changes, it will revisit its ruling on the applicability of the requirements with respect to double counting set out in Section 5.2.2 of the VCS 2007.1 and the VCS Association shall provide a further policy announcement.