On May 12, 2009, the Québec government introduced Bill
42, which provides a framework for a provincial greenhouse gases
("GHG") cap-and-trade system, the
details of which are to be fleshed out at a later time by the
government in regulations and orders. Key components of Bill 42
include the establishment of a public registry, GHG reduction
targets for regulated sectors using 1990 as the baseline and a
cap-and-trade system. Emission units would be obtained either by
allocation or auction or through a cap-and-trade system with
trading expected to be carried out on the Montreal Climate
Exchange. Fees collected from emitters would be paid into a fund
for climate change initiatives.
If passed, Bill 42 will enable Québec to meet its
commitments in the Western Climate Initiative, a group of seven
U.S. states and four Canadian provinces (British Columbia,
Manitoba, Ontario and Québec) that have agreed to a common
GHG emissions reduction target and are committed to a regional
cap-and-trade system. British Columbia has already enacted climate
change legislation to enable it to establish a cap-and-trade system
and Manitoba and Ontario are expected to follow suit shortly. These
provincial regimes will differ from the intensity-based approaches
currently used in Alberta and proposed by the federal
government.
Continued regulatory uncertainty has led to a growing consensus
among Canadian business leaders on the urgent need for a clear and
cohesive national carbon policy that would be compatible with the
proposed U.S. carbon regime. However, given the current disparity
between provincial and federal policy directions, a national carbon
policy seems unlikely over the short term.
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