The pandemic took its toll on the last auction of the carbon market : only 37% of units in issue to be sold by Québec for the current period have found a taker, then they are usually all sold. This potentially means that the major emitters emit less GHG in the atmosphere, but also that the government is deprived of approximately $ 160 million to finance the ecological transition. The ministry of the Environment ensures that this shortfall does not care in the long term.
Four times a year, the governments of Quebec and California are sale of the units of emission of greenhouse gas (GHG) emissions, that major polluters must obtain. Every three years, they must prove that the units in their possession to cover their emissions. The minimum price of the units and their amount vary to reduce the total emissions gradually.
On 20 may, the ministry of the Environment and the Fight against climate change (MELCC) put in sale 9 068 906 units that can be used for the current period (2018-2020). The number, 3 335 153 (37 %) were sold. The ministry was also in the sale 1 319 750 units of “vintage 2023” that can be used during the next period (2021-2023). Among them, 268 295 (20 %) have found a taker. All the units were sold at the floor price of 23,17 $. The sale generated a gross income of approximately $ 82 million for Quebec.
Last year, the auction had generated an average income of 242 million. In addition, prior to the sale of the last month, 100% of the units put up for sale since may of 2017 had found a taker. All monies collected are paid into the green Fund, which finances environmental projects and the fight against climate change.
Johanne Whitmore, senior researcher at the Chair of management of the energy sector at HEC Montréal, is now wondering how Quebec is going to finance the fight against climate change, especially if the economy is slow to restart after the pandemic. “If the revenues of the auction are much lower for three years, and since the government also has other priorities in health and to the economic recovery, it is possible that the money for the fight against climate change to be redirected “, is afraid of it.
According to its last budget, the government Legault plans to take $ 192 million in the carbon market during the first quarter of 2021 — a period that includes a single auction — in order to implement the new Policy framework for electrification and the fight against climate change, it must state this fall.
Stopped by The Duty, the cabinet of minister Benoit Charette provides in a written response that the financing of measures to combat climate change is not a function of the revenue of each auction, but many envelopes, granted annually to the budget.
“However, the prime minister and the Finance minister have already announced that the money that had been laid down in the Environmental budget 2020-2021 will be maintained. Therefore, there will be no impact on the availability of monies to fund control measures [against] climate change provided for in the budget “, says one. The MELCC also highlights that the recent fall in sales of units may not have a significant effect on the revenue considered in the longer term.
Units of programming that can be carried
On the carbon market québec-california, each unit of emissions is one tonne equivalent of CO2. However, the 7 749 156 units not sold by the MELCC do not necessarily correspond to an emissions reduction of 7.7 megatonnes, according to Normand Mousseau, a physics professor at the University of Montreal and the director of the Institut de l’énergie Trottier. This spring, transportation, automobile, individual has slowed, certainly, but the heavy industries have largely continued their activities. “I suspect that the transmitters have delayed their purchases of units, to see what will happen with the economy,” he believes.
In Quebec, the units of issue that were not purchased may be carried over to the auctions later. For this, the bids must, however, exceed the floor price in both auctions in a row. Furthermore, the quantity of emission units put back on sale on the occasion of an auction may not exceed 25 % of the number of units originally planned. The units of the vintages in the future, however, simply deferred to the year in question.
In recent years, the auction will surpass typically the set minimum. It was the first time since may of 2017 that the auction did not exceed the price floor.
No matter what happens in the longer term, Patrick Bonin, head of the campaign climate and energy at Greenpeace Canada, the Duty to “major concerns” about the financing of the fight against climate change because of the scanty sales of emission units in may.
Furthermore, it urges the government to give a boost to eco-Quebec post-pandemic. “For the moment, there was no stimulus that could be described as green,” he laments.