Carbon Exchange | Quebec wants a better agreement with California

(Quebec) Quebec feels disadvantaged by the carbon exchange with California and wants to renegotiate it.

There has often been talk of “capital flight” to California in this deal. In 2020, the Parti Québécois (PQ) even mentioned a potential “capital flight” of 16 billion over 10 years, according to a study by HEC.

Environment Minister Benoit Charette said on Wednesday that he will fly to the West Coast state on Sunday to renegotiate the Cap and Trade System for Emissions Rights (SPEDE), also called the carbon exchange.

Quebec companies must pay 230 million per year to California by buying carbon credits, indicated the minister in a parliamentary committee.

Remember that the SPEDE aims to reduce the greenhouse gas (GHG) emissions of the two federated states: companies in the most polluting major sectors can buy at auction every three months “units”, in a way, rights resignation. Year after year, the cap on allowable emissions decreases, forcing up the price of units and inducing companies to reduce their emissions, or even buy “units” in the other jurisdiction.

Mr. Charette said he was going to California “with a view to renegotiating our partnership”, particularly regarding “offset credits”.

Québec solidaire spokesperson for the environment, Alejandra Zaga-Mendez, referred to the “capital flight” when questioning the minister.

Mr. Charette nevertheless assured that the SPEDE is more advantageous than a carbon tax, the means recommended by the federal government, since all the income generated by the carbon exchange is reinvested in the fight against climate change.

In 2021-2022, the SPEDE brought in 1.2 billion to the government, according to the Ministry of Finance.