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Canada's agricultural sector will be affected by policy decisions that respond to the climate change challenge.

At the international level, decisions under the United Nations Framework Convention on Climate Change (UNFCCC)—such as the stringency of targets; the role of the land-use sector in offset markets; and the rules for accounting of GHG emissions in the land use, land-use change and forestry (LULUCF) sector—could affect Canadian farmers. The domestic policy response in Canada and other countries could raise concerns around agricultural offsets, competiveness and increased production of biofuels. Dealing effectively with climate change in a manner that accounts for the Canadian agricultural sector will require efficient and effective mitigation policies that follow best practices, capitalize on mechanisms in an international agreement, and avoid interference with global market development and access.This paper examines some of the challenges and opportunities for the Canadian agricultural sector that may arise out of the evolving national and international climate change regimes. The paper first describes mitigation potential in the agricultural sector in Canada. It then examines biofuels, agricultural offsets in an emission trading scheme and competitiveness concerns. The paper concludes with a summary of implications for policy development in Canada.