INTERVIEW: Quebec’s ETS outsources CO2 cuts now, as cash builds low carbon future -minister

Published 16:32 on May 26, 2015  /  Last updated at 16:32 on May 26, 2015  /  Americas, Canada, US  /  No Comments

Quebec’s linking with California’s carbon market last year is helping lower costs for its industries by outsourcing CO2 cuts to the US state in the near term, while helping the Canadian province secure growth opportunities far into the future, its environment minister David Heurtel told Carbon Pulse.

Quebec’s linking with California’s carbon market last year is helping lower costs for its industries by outsourcing CO2 cuts to the US state in the near term, while helping the Canadian province secure growth opportunities far into the future, its environment minister David Heurtel told Carbon Pulse.

The joint WCI-administered California-Quebec carbon market covers 460 million tonnes of GHGs a year, with 65 million tonnes – or less than 15% – from the Canadian province.

With virtually all Quebec electricity generated from hydro, the province faces high costs to cut emissions further, and Heurtel admits that linking allows its covered industries to meet caps more cheaply by purchasing allowances as Californian emitters invest in abatement.

“They (Quebec emitters) are going to be buyers definitely, but at the same time there is going to be a lot of economic development … It’s not just simply buying,” said Heurtel.

Quebec is relying on its ETS to help it cut its GHG emissions by 20% under 1990 levels by 2020.

But similar to fellow hydropower giants Norway and Switzerland, Heurtel said it is the revenue raised via the ETS that is underpinning Quebec’s funding of climate action.

Quebec expects to spend over C$3 billion ($2.4 billion) via its Green Fund over 2013-2020, with most of that funded by the proceeds from auctioning Quebec’s share of ETS allowances.  The cash will go towards programmes to promote and develop public transport, electric vehicles, clean technologies and research and development.

TOOLS FOR THE FUTURE

“This allows Quebec to develop economic sectors for the future. It is giving us the tools to transition our economy into a very competitive position in the 21st Century,” said Heurtel.

“It’s an economic strategy – just as Quebec made the strategic choice to go to hydro electricity in the 1960s and 70s, aeronautics in the 1990s and video games in the 2000s.”

He said that among the Quebec companies already benefitting are Biothermica, which develops technology to capture methane gas from US coal mines and sells the resulting carbon offsets into the WCI programme.

Another is Lion Bus, which was pitching its fully electric-powered schoolbuses to Californian authorities last month.

Heurtel said expanding the WCI market to Ontario and possibly other west coast US states, and possibly other nations, was enhancing opportunities for firms to become global leaders in their sectors, as utility HydroQuebec and aircraft manufacturer Bombardier did previously through Quebec’s strategic influence.

“It actually benefits Quebec’s companies to develop innovative technologies being used within the current system, with opportunities to grow further with Ontario on board.”

By Ben Garside – ben@carbon-pulse.com