Quebec is discussing a regional market with the governors of New England states and leaders in Ontario, and California is working with Oregon and Washington, according to Philippe Couillard, Quebec’s premier. California and Quebec are currently preparing for their first joint auction in November.
Oregon and Washington backed out of a similar initiative in 2011.
A market with only California and Quebec is not ideal, but adding some Western states, New England partners and Canadian provinces should be sufficient, Couillard said, adding that the governors of New England states, particularly Vermont Governor Peter Shumlin, are very interested in a partnership.
Vermont is part of the Regional Greenhouse Gas Initiative, a regional carbon market that regulates emissions from power plants in New England. In September, almost 18 million carbon allowances sold at RGGI’s carbon auction, generating $87.8 million. At an RGGI auction in June, all available allowances were sold, generating $90.67 million.
Under the cap-and-trade systems created by California and Quebec, allowances permitting the release of a metric ton of carbon dioxide are issued through free allocations and auctions. The pool of allowances shrinks over time to cut pollution.
California’s pool of allowances is designed to contract enough to cut emissions about 15 percent by 2020. Quebec has set a target of cutting greenhouse-gas releases to 20 percent below 1990 levels by the end of the decade.
Quebec expects to generate C$3 billion ($2.7 billion) in revenue from its carbon allowance auctions by 2020. The money would then be allocated to a fund to finance measures to fight climate change.
Photo Credit: Carbon market via Shutterstock