Cap and trade: Quebec leads the way, at the expense of consumers
MONTREAL, July 4, 2014 /CNW Telbec/ - On January 1st, 2015, the Western Climate Initiative, the carbon market formed by Quebec and California, will officially come into effect. As a result of this new tax, the price of gasoline will increase by some 3¢ a litre. This will deal a direct blow to our wallets and to the Quebec economy.
"The idea of a carbon market makes some sense. After all, the use of a similar mechanism allowed us to deal with the problem of acid rain. The problem is in the way that this market is set up, in addition to the fact that no one is following our lead in this costly undertaking. South of the border and in Ontario, the costs of fossil fuels will become more attractive," explains Youri Chassin, economist at the Montreal Economic Institute.
Quebec is already at the head of the class among Canadian provinces when it comes to greenhouse gas (GHG) emissions per capita. Even California has not adopted targets that are as ambitious as Quebec's in this regard. But each additional reduction is more expensive when our levels are already low, which puts us at an even greater disadvantage.
"A carbon market should bring together several Canadian provinces and American states, but right now, we're very far from this objective," says Youri Chassin. "Wouldn't it be more prudent to work on getting other partners on board before heading down this road?"
A carbon market is a market mechanism for reducing GHG emissions that allows organizations to buy and sell "pollution permits." If a given polluter emits more GHGs than expected, it must buy such permits, whereas it can sell them if it lowers emissions below the prescribed limit, thereby rewarding good behaviour.
Youri Chassin, economist at the Montreal Economic Institute, published an op-ed entitled "Bourse du carbone : dans quelle galère embarquons-nous" in today's edition of Journal de Montréal.
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The Montreal Economic Institute is an independent, non-partisan, not-for-profit research and educational organization. Through its studies and its conferences, the MEI stimulates debate on public policies in Quebec and across Canada by proposing wealth-creating reforms based on market mechanisms.
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