The Regulation will come into force on January 1, 2012. The
first year of the system will be a transition year which will allow
emitters and participants to familiarize themselves with how the
system works. In 2012, emitters and participants will be able to
register with the system, take part in pilot auctions and buy and
sell greenhouse gas (GHG) emission allowances on the market. No
reduction or capping of GHG emissions will be required during this
The capping and reduction of GHG emissions will start officially
on January 1, 2013. Starting on January 1, 2013 some 75 operators,
primarily in the industrial and electricity sectors, whose annual
GHG emissions equal or exceed the annual threshold of 25 kt CO2e
(25 thousand tonnes of carbon dioxide equivalent), will be subject
to the capping and reduction of their GHG emissions.
Starting on January 1, 2015, the operators of businesses that
distribute fuel in Québec or import fuel for their own
consumption, and whose annual GHG emissions due to its combustion
reach or exceed the annual threshold of 25 kt CO2e, will also be
subject to capping and reduction.
The Government of Québec has stated that, unlike
traditional regulation, where companies must not exceed an emission
standard (a strict limit on the discharge of pollutants), the cap
and trade system will give companies flexibility in planning their
short, medium and long term investments. In effect, the system will
allow companies to buy emission allowances on the market until they
are ready to modernize or replace certain equipment. Companies that
reduce their GHG emissions below the regulatory requirement would
have an allocation of emission units that is higher than what they
actually produce. By selling their excess units, such companies
could either recover part of their investments or use the proceeds
to engage in further optimization.
Links to our previous blogs on this Regulation are available here.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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