In 2013, Québec set up a cap-and-trade system for greenhouse gas (GHG) emission allowances (the C&T system). Since 2014, Québec’s market has been integrated with California through the Western Climate Initiative. This joint market is the world’s only carbon market designed, developed and operated exclusively by subnational governments in different countries. It covers more than 48 million people and $3.6 trillion in GDP [PDF]. Ontario was a part of this market from January 1, 2018, until July 3, 2018.
Québec’s market with California is governed by an agreement that allows joint auctions of emission allowances as well as harmonization of regulations and reporting.
In 2012, the minimum price for a GHG emission unit at auction was set at $10. The minimum price per metric ton of carbon dioxide (CO2) increases annually by 5% (plus inflation). As of 2021, the minimum price is set at $17.36 (USD $12.94) for Québec. However, the units are regularly traded at a higher price than the minimum annual price.
The carbon market is intended for the following emitters:
- industrial establishments that emit 25,000 metric tons or more of CO2 equivalent annually
- electricity producers and importers that emit 25,000 metric tons or more of CO2 equivalent annually
- distributors of fossil fuels used in Québec (gasoline, diesel fuel, propane, natural gas and heating oil). Distributors are required to cover the GHG emissions resulting from the products they distribute.
The C&T system covers approximately 80% of GHGs emitted in Québec. Additionally:
- as of 2019, industrial establishments that declare annual emissions of more than 10,000 tonnes of CO2 equivalent, but less than the reporting threshold of 25,000 tonnes of CO2 equivalent, can voluntarily register to the carbon market to become emitters subject to the C&T system
- the carbon market is also accessible to natural and legal persons who wish to participate even if they do not have a regulatory obligation to fulfill (e.g., investors, brokers, consultants, etc.).
On March 12, 2020, the U.S. District Court for the Central District of California rejected the Department of Justice’s claim that the California-Québec agreement violated the U.S. Constitution’s Treaty Clause and Interstate Compact Clause.
Electrification and Climate Change Fund
All proceeds from the quarterly GHG emission units auctions go to the Electrification and Climate Change Fund (formerly the Green Fund), which sets up measures to reduce GHG emissions, and is intended to help the economy adapt to the impacts of climate change and use renewable energy sources. Since the beginning of the program, more than $4.5 billion have been collected.
Bill 44, passed by the National Assembly of Québec in October 2020, provides that all funding generated by the cap-and-trade program must be geared towards climate change measures.
2013-2020 Climate Change Action Plan
The 2013-2020 Climate Change Action Plan [PDF] (the Plan) which ended on March 31st, 2021, initiated more than 20 programs to address the following challenges, among others:
- reducing fossil fuel consumption and improving the energy efficiency of buildings, industrial processes, and vehicle fleets
- providing greater support for the development of mass and active transit
- accelerating the electrification of transport and the creation of new companies in this field
- expanding the use of renewable energy sources in all activity sectors
- encouraging research and development in the field of clean technology having a proactive approach with respect to climate change adaptation
2030 Plan for a Green Economy
The 2030 Plan for a Green Economy [PDF] (2030 PGE), was released in Fall 2020, taking over the 2013-2020 Climate Change Action Plan. The 2030 PGE outlines actions and government plans necessary to meet Québec’s GHG emission reduction target of 37.5% compared with 1990 levels by 2030, and to reach carbon neutrality by 2050.
With a budget of $6.7 billion to be spent over the next five years, Québec has made the electrification of transportation, buildings and industrial activities the 2030 PGE’s focal point, with the goal of replacing currently consumed fossil fuels with Québec produced hydro-electric power. An initial implementation plan (in French) covering the period 2021-2026 was released on November 16th, 2020.
The implementation of this plan is largely based on the electrification of the economy, particularly in the transport sector. Incentives will therefore be provided to ensure this energy transition. The Québec government also plans on introducing new rules regarding the free allocation of emission units on the carbon market for the period 2024-2030.
The 2030 PGE also aims to reduce the use of fossil fuels in buildings by, among other measures, ending the use of oil heating and prioritizing lower carbon footprint materials such as wood. These measures will apply to both new and existing buildings.
Finally, the government plans to seek private investment for the development of renewable resources (green hydrogen and bioenergy), and the eligibility criteria for government assistance will be reviewed to broaden project eligibility.
2030 Energy Policy
On April 7, 2016, the Government of Québec announced its 2030 Energy Policy [PDF]. The goal of the policy is to make the province a North American leader in renewable energy and energy efficiency, with five targets to be achieved by 2030. (Using 2013 data):
- enhance energy efficiency by 15%
- reduce by 40 % the amount of petroleum products consumed
- eliminate the use of thermal coal
- increase by 25% overall renewable energy output
- increase by 50% bioenergy production
The 2030 Energy Policy is meant to allow Québec to reach its objective of reducing greenhouse gas (GHG) emissions to 37.5% below 1990 levels by 2030.
In April 2017, the province established Transition énergétique Québec, a new agency whose mission is to support, stimulate and promote energy transition, innovation and efficiency and to ensure integrated governance. Transition énergétique Québec assists in coordinating targeted research and development in the areas of energy efficiency, electric vehicles and processes, electricity use and storage, and renewable energy output.
The province also plans on enforcing stringent technical and environmental standards to ensure the safe transportation of hydrocarbons. It will also adopt new procedures related to territorial planning and public participation for energy resource development projects to create social acceptability in host communities.
The Maritime Strategy
The 2015-2020 Maritime Strategy, a plan to enhance the energy efficiency of maritime transport using new energy sources, including liquefied natural gas, ended in March 2020. In 2021, the government will unveil the next maritime vision, based on three orientations:
- provide the St. Lawrence River with modern and competitive port infrastructures
- ensure efficient navigation on the St. Lawrence that respects the ecosystems
- offer maritime communities promising and sustainable development opportunities
This vision will include various measures designed to enhance the economic potential of the maritime sector while promoting a goal of responsible use of Québec's maritime resources.