The Cap-and-trade program of the Western Climate Initiative ITU SYMPOSIUM ON ICTs THE ENVIRONMENT AND CLIMATE CHANGE Montréal 29 May 2012 Robert Noël de Tilly Senior Policy Advisor Ministry for Sustainable Development, Environment and Parks Government of Québec Canada

Presentation Outlook 1. Quebec’s Climate Change Action 2. The Western Climate Initiative Cap- and-Trade program

Evolution of GHG emissions in Quebec Evolution of GHG emissions in Quebec 3

Evolution of GHG emissions by sectors Evolution of GHG emissions by sectors 4

Quebec Climate Action Climate Change Action Plan Green Fund Carbon Levy Total Investment of 975 M$ in 5 years green projects 500 more under analysis Climate change Action Plan in preparation

Green Fund Projects Energy efficiency Energy substitution and recuperation Solar heating Wind Farms Cellulosic ethanol Biogas Biofuels Electric cars Public transportation

Green Projects in Québec Example of energy substitution project In five years, 19 % reduction in GHG emissions from College and University buildings Wind farms in operation : : 1 farm and 100 MW : 11 farms and 1000 MW : 30 farms + and 4000 MW

John H. Dales Economist at University of Toronto Initiator of « Emissions trading » concept Author of : Pollution, Property and Prices University of Toronto Press 1968 Concept applied to Acid rain and Climate Change Programs

EMISSION TRADING TWO MAJOR COMPONENTS 1. Cap : throuh regulation 2. Market : buyers and sellers exchange allowances Kyoto Protocol encourages use of emission trading

The Western Climate Initiative MAIN OBJECTIVE Develop a cap-and-trade program to reduce regional GHG emissions PARTNERS California, British Columbia, Ontario, Manitoba, Québec

Program Scope Program Scope –First Auction of allowances in November From 2013From 2013 –Electricity generation –Industrial sector –Threshold: –Threshold: 25,000 tonnes of CO 2 eq. per year From 2015From 2015 –fuel distribution (transportation and buildings) –Threshold ; –Threshold ; 25,000 tonnes of CO 2 eq. per year 11 The Western Climate Initiative

Annual caps of GHG emission allowances The annual caps will be established by decree, in the fall of 2011, for Mitigation goal : 20% below 1990 levels by The Western Climate Initiative

13 Compliance obligation Three compliance periods : –First period : 2013 to 2014 –Second period : 2015 to 2017 –Third period : 2018 to 2020 Surrender of a number of allowances that equals total verified emissions reported during a compliance period The Western Climate Initiative

14 Compliance obligation On October 1 st following the end of each compliance period (2015, 2018, 2021)On October 1 st following the end of each compliance period (2015, 2018, 2021) –the compliance account must contain a number of allowances that equals the total amount of GHG emissions reported and verified during the compliance period –the use of offsets credits is limited to 8 % of compliance obligation –penalty of 3 to 1 and financial penalty for non-compliance The Western Climate Initiative

Flexibility Mechanisms and Other features Banking is allowed / Borrowing is not allowedBanking is allowed / Borrowing is not allowed Contingency/Strategic ReserveContingency/Strategic Reserve Early Reduction Allowances ( )Early Reduction Allowances ( ) Electronic transactions / secured registryElectronic transactions / secured registry Holding limits / market monitoring to prevent manipulationHolding limits / market monitoring to prevent manipulation 15 The Western Climate Initiative

16 Offsets credits Priority sectors for the development of protocolsPriority sectors for the development of protocols –Agriculture –Forestry –Waste management Other sectors to be announcedOther sectors to be announced –Offsets credits program –Use : limited to 8 % of the compliance obligation –GHG Reductions or sequestration from sectors or activities not covered by the program –Within WCI, Canada, United States, Mexico –Other countries - to be determined The Western Climate Initiative

Information WCI Robert Noël de Tilly Ministère du Développement durable, de l’Environnement et des Parcs Québec, Canada