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In 2013, the Québec government implemented a cap-and-trade system [PDF] for companies in the industrial and electricity sectors that emit 25,000 tonnes or more of CO2 equivalent per year. Companies impacted by the system include industrial producers during the first compliance period (2013–14), as well as fossil fuel distributors during the second (2015–17) and third (2018–20) periods of implementation. Other entities may voluntarily participate in the province’s carbon market as well. Each year, certain emission credits are provided to each regulated entity free of charge, with the number of free units declining 1–2% per year beginning in 2015. Entities that exceed their respective caps must purchase additional credits at auction on the province’s carbon market. A minimum price of $10.75 per metric ton of CO2 equivalent was set during the first year of operation (2013), with prices scheduled to increase by 5% (plus inflation) per year until 2020.
Through this system, Québec’s carbon market has been linked with that of California, with special price rules governing auctions run jointly between the two jurisdictions.
Ninety-seven per cent of electricity generated in Québec comes from renewable sources including hydroelectric power. The province has also begun to invest heavily in wind power, and has implemented legislation intended to address emissions associated with other fuel-related activities, including the promotion of electric and hybrid vehicles.