A look at Quebec’s system

offset credits that can be purchased when a company goes over its emissions cap.

Ontario Premier Kathleen Wynne announced Monday the province is following in Quebec’s footsteps with the creation of a cap-and-trade system to lower greenhouse gas emissions. Here’s a look at Quebec’s system:

Who is affected by Quebec’s capand-trade program?

The rules of the province’s cap-andtrade system were applied to the industrial and electricity sectors from 2013 to 2014. The pollution caps have been expanded to apply to firms using fossil fuels such as gasoline, diesel, propane, natural gas or heating oil.

As of this year, the Quebec government says mandatory registrations cover an estimated 85 per cent of the province’s emissions. Participants include Hydro Quebec, aluminum producer Rio Tinto Alcan Inc., and pulp and paper producer Fortress Specialty Cellulose Inc.

How does it work?

Participants in the cap-and-trade system are allowed a declining amount of greenhouse gas emissions each year, meaning they must either cut their pollution or purchase credits to make up for the difference.

There are credits available for early action that is taken to reduce emissions, but there are also limits on

Has Quebec earned money from this?

Not much. In order to prevent companies from fleeing to jurisdictions where there is no cap-and-trade system or extra climate-related expenses, the Quebec government gave out its emissions credits at no charge to industrial polluters. Electricity and fossil fuel distributors, emission brokers and individuals have had to purchase their credits in auctions.

To date, auctions have brought in revenues of more than $330 million.

Has Quebec’s cap-and-trade system reduced emissions?

It’s too early to say definitively that the system has, or has not, been effective because caps on greenhouse gases were applied to the full spectrum of polluters only this year, said Steven Guilbeault, director of the environmental group Équiterre.

How does Quebec ensure that polluters comply with the rules?

Those who have blown past their emission ceilings or to have otherwise ignored the rules can be subjected to monetary penalties, criminal charges, suspension or expulsion from the cap-and-trade system, or an injunction to shut down operations.