Cap & trade pays off for Quebec

LOWER CARBON TAX

The one province that won't feel the force of a federal government carbon tax of $170 by 2030 is Quebec.

Quebec is exempt from the federal government's carbon tax because since 2013 it operates a cap-and-trade system and will reap the benefits of that system in the future.

In Quebec, certain companies are capped on the amount of greenhouse gases they emit. Going over that cap requires companies to buy credits, or permits, for every tonne of carbon they exceed.

Canadian prices for permits that Quebec industry can buy were trading at $17 as of Dec. 1. It is estimated that Quebec's “carbon tax” for 2022 will be about $23 per tonne while the federal carbon tax will be $50 — and raising fast.

As Jack Mintz, economist at the University of Calgary's School of Public Policy, noted, Quebecers already get cheaper electricity than the rest of Canada.

“That does give producers a huge benefit in Quebec. People who use energy (in Quebec), because the carbon price is lower, are going to have lower energy costs.”

He added, “Quebec, given that its cap-and-trade system is recognized as a substitute for the carbon tax, and the Quebec price is only $17 Canadian, which is little more than half the ( current) carbon tax in other provinces, this produces in Quebec a significant competitive advantage not only internationally but to other markets in Canada. This will be particularly relevant to energy intensive manufacturing such as aluminum.”