Cap-and-Trade Regulations come into force in Quebec

Climate Change Law Practice Group Blog

January 05, 2012

As Canada announced its withdrawal from the Kyoto Protocol in late December, 2011 and amid much discussion about the future of Canadian climate policy, January 1, 2012 marked the coming into force of Quebec's Regulation respecting the cap-and-trade system for greenhouse gas emissions.  British Columbia, Ontario and Manitoba, who along with Quebec are all members of the Western Climate Initiative (WCI), have all announced plans to introduce cap and trade programs (and are currently at different stages of legislative progress on these promises), but Quebec continues to lead on implementation and will almost surely become the first province with an enforced cap-and-trade program. 

Designed to integrate with California's implementation of a cap-and-trade program under the WCI, the first year of the program is 'transitional', giving emitters an opportunity to familiarize themselves with the system and buy and sell greenhouse gas emission credits voluntarily, before emission caps come into effect on January 1, 2013.  As of next year, approximately 75 industrial and electrical sector entities who emit at least 25 thousand tonnes of carbon dioxide equivalent greenhouse gases annually will be bound by the new caps on total emissions.  In 2015 additional parties involved in the fuel importation or distribution sector will become subject to the caps. If these parties are unable to reduce their emissions to the prescribed cap, they may purchase the credits necessary to cover their excess. Conversely, companies who reduce emissions below the cap will be able to sell credits through the system.

Companies who emit in excess of the cap and fail to procure the required additional credits, or otherwise violate the regulation may face a number of administrative sanctions or a fine of up to $250,000.