Quebec will hold its first sale by mutual agreement of carbon allowances on Sep. 22, its environment ministry said on Friday, offering firms covered by the Canadian province’s emissions trading scheme the opportunity to buy a share of nearly 20 million units to help them meet the upcoming compliance deadline.
The sale will offer allowances from a reserve account maintained by Quebec’s environment ministry to keep a lid on permit prices. The sale is meant to give emitters an alternative way of acquiring the necessary carbon units.
Emitters regulated under the province’s cap-and-trade scheme must surrender allowances on Nov. 2 to cover their emissions over 2013-2014.
A total 19,985,298 allowances will be sold in the mutual agreement sale, which is effectively an auction with set bid prices, and the units will be split into three equally-sized categories.
Category A is the cheapest, with 6.66 million allowances priced at $44.96 each. Category B is priced at $50.58/unit, while Category C is priced at $56.20/unit. The prices, which were initially set in 2014, increase annually by 5% plus inflation.
Companies now have until Aug. 21 to apply to participate in the sale, which will be held between 1300 and 1600 Eastern Daylight Time on Sep. 22.
Under the scheme’s rules, the government can hold four such sales per year, and only emitters registered in the WCI registry whose general account does not contain any allowances eligible for the first compliance period are allowed to participate.
- Quebec launched its carbon market in Jan. 2013, and linked it to California’s in Jan. 2014 via the Western Climate Initiative (WCI).
- Quebec has set itself a province-wide target to reduce its GHG emissions by 20% below 1990 levels by 2020.
- Under its carbon market, compliance is split into three periods: 2013-2014, 2015-2017, and 2018-2020.
- In the first compliance period, the cap is set at 23.2 million tonnes per year and covers the output of some 80 installations from the power and industrial sectors.
- In the second compliance period, the scheme’s scope is expanded to cover distributors of fuel, including gasoline, diesel, propane, natural gas and heating oil. As a result, in 2015 the emissions cap is increased to 65.3 million tonnes, and is estimated to cover 85% of the province’s GHGs.
- The cap then decreases at an annual rate of nearly 4% until 2020, when it will be set at 54.74 million tonnes.
- The province’s reserve account, which acts as a soft price ceiling, is comprised of allowances equivalent to 1% of the cap in 2013 and 2014, 4% of the cap in 2015-2017, and 7% of the cap in 2018-2020.
By Mike Szabo – email@example.com