Ottawa could be suspended from rights to trade carbon dioxide if found to be in breach of the rules by the enforcement branch of the UN's Kyoto Protocol. Greece was suspended last month, the first state to face such a sanction.

"On 5 May 2008 Canada was given an official notification of the decision of the enforcement branch to proceed" with a formal question over compliance with rules on registering emissions, the enforcement branch said in a statement.

The enforcement branch warned Canada last month that it risked scrutiny over alleged shortfalls in its greenhouse gas registry. It said Canada missed a Jan. 1, 2007, reporting deadline by more than two months.

"A national registry is a computerized system used to track holdings of greenhouse gas credits, similar to the computerized accounting system of a bank," it said.

Canada's Conservative government said it had ordered a proper registry be set up and said final testing should be complete by the end of the month.

Environment Minister John Baird blamed the delay on the previous Liberal government, which was in power for almost 13 years until January 2006.

"We had 13 years of backlog and I'm only one man ... we're getting it done," he told reporters in Ottawa.

Proper tracking of emissions is the backbone of Kyoto, which binds 37 industrialized nations to cut emissions by an average of 5 percent below 1990 levels by 2008-2012 in a bid to avert ever more droughts, floods, heat waves and rising seas.

If found to be in non-compliance, Canada could be suspended from Kyoto carbon trading. And it would also have to present a plan within three months to sort out its non-compliance.

Under Kyoto trading mechanisms, industrialized nations can meet their targets by paying for emissions cuts abroad, for instance by investing in wind farms.

Canada's emissions of greenhouse gases were 25.3 percent above the 1990 level in 2005, far above its Kyoto target of a 6 percent cut by 2008-12. Canada has said its target is unachievable, especially since high oil prices make it attractive to develop its oil sands, a process that involves high emissions.

Canada has also said it does not want to make up the difference from its Kyoto target by funding emissions cuts in other nations using carbon trading options.

The enforcement branch said Canada could not be found in non-compliance with its emissions targets -- something that could only happen after 2012.

The enforcement branch will hold a meeting in late May or mid-June to review the issue, with input from Canada. It could reach a preliminary ruling, or agree to drop the issue.