Overview

Description

Québec’s Cap-and-Trade System started in 2013 and covers ~80% of the province’s GHG emissions. The system covers fuel combustion emissions in the power, buildings, transport, and industrial sectors, as well as industrial process emissions. Covered entities must surrender allowances for all their covered emissions. Most emission units are auctioned, with a portion freely allocated to emissions-intensive, trade-exposed (EITE) sectors and to electricity producers with fixed-price sales contracts concluded before the announcement of the system. Québec has been a member of the Western Climate Initiative (WCI) since 2008 and formally linked its system with California’s in 2014.

Recent Developments

In June 2025, Québec published its 2025–2030 Implementation Plan for a Green Economy, with funding drawn primarily from carbon market revenues to support transportation electrification, energy efficiency, and clean technology programs. Regulatory amendments to the CaT system advanced through 2025, following stakeholder consultations in 2023 and a market notice in October 2024. The draft regulation is expected to be enacted in spring/summer 2026. Proposed amendments include changes to unit supply, offset credit limits, reserve prices, and compliance period alignment with 2030 and 2050 targets. In 2025, Québec, California, and Washington continued to affirm their commitment to explore potential linkage.

Coverage

The Quebec CaT applies to GHG emissions from the industry, power, transport and buildings sectors and includes industrial process emissions.

Pricing and Allocation Approaches

Free allocation (Intensity-based), Auctioning

Compliance Approaches

Other

Relation to Other Compliance CPIs

The Quebec CaT has linked with the California CaT since 2014 under the Western Climate Initiative (WCI). The Quebec Cap-and-Trade system meets the federal carbon pricing requirements and the federal backstop is therefore not applied.

Covered Sectors

Electricity and heat

Industry

Mining and extractives

Transport

Buildings

Agriculture, forestry and fishing fuel use