Compliance Factsheets

State and Trends of Carbon Pricing Dashboard

The State and Trends of Carbon Pricing Dashboard is an interactive online tool aimed at policymakers, businesses, and researchers. It provides the latest information on existing and emerging direct carbon pricing initiatives around the world.

Name of Instrument

Quebec CaT
Subnational - State/Province ETS
Implemented in 2013
Quebec
Free allocation (Intensity-based), Auctioning
Floor price, Market Stability reserve
All
Upstream, Point Source, Downstream
Yes, with quantitative limit

Covered Sectors

  • Covered
  • In principle
  • Electricity and heat
  • Industry
  • Mining and extractives
  • Transport
  • Buildings
  • Agricuture, forestry and fishing fuel use

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

Coverage

The Quebec CaT applies to GHG emissions from the industry, power, transport and buildings sectors and includes industrial process emissions. Québec keeps an emission units reserve account to sell to entities that do not have enough allowances to cover their obligations. Covered entities can also cover a part of their GHG emissions by using offset credits.

Pricing and allocation approaches

The auction reserve price sets the minimum price at which emission units are available at auction. It is equivalent to the annual minimum price of the previous year, increased by 5% and an Indexation rate based on the Price Index Consumption (CPI) as established by the “Financial Administration Act”. For 2024, it is set at CAD 22.93 (USD 16.98) for Québec and USD 24.04 for California. For joint auctions with California, the highest value in USD between Québec’s and California’s auction reserve prices, based on the exchange rate of the Bank of Canada the day prior to the auction, will be the reserve price for that sale. Québec maintains an emission unit reserve to sell to entities that do not have enough allowances to cover their obligations (“sales by mutual agreement”). The reserve is filled with set portions of the annual cap (4% for 2021 and beyond). Sales by mutual agreement are held a maximum of four times per year at three price categories that contain an equal share of emission units on offer. December 2020, Québec amended the prices of its three tiers to align more closely with California. For 2024, the prices of the three tiers are CAD 54.67 (USD 40.50), CAD 70.24 (USD 52.15), and CAD 85.83 (USD 63.58). Emission allowances under the cap are distributed via a combination of free allocation and auctioning. Free allowances are generally allocated using benchmarks based on input of material or output of products, production levels, and an increasingly stringent GHG emission intensity target that varies per activity. Electricity producers and distributors, as well as fuel distributors, do not receive any free allocation. The total amount of emission allowances is determined top-down and decreases annually.

Compliance Approaches

Upstream (buildings, transport); point source (industry, in-province power); imported electricity at the point of first delivery onto Québec’s electricity grid.  The compliance cycle is based on a three-year compliance period. Operators have to submit their emissions reports on an annual basis by June 1 of the following year and need to meet their compliance obligations by November 1 in the year after the three year compliance period ends. Operators can use eligible offsets to meet up to 8% of their compliance obligations. Only offsets generated in Canada or those from a linked jurisdiction (California) are eligible. Offsets need to meet the requirements of all applicable offset protocols.

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 Emissions

Price range:
in 2023

Indicates instruments with multiple price levels. Only the main rate is shown for these instruments. Data last updated on 1 April 2023

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