The carbon pricing ratio is an indicator that measures the presence of carbon pricing in the Québec economy overall in relation to the presence of carbon pricing in the rest of the world. It simultaneously considers the explicit price of one tonne of greenhouse gases (GHG) and the proportion of emissions covered in all administrations the world over.
Since 2013, Québec has priced its greenhouse gas emissions by means of a GHG emission cap-and-trade system (C&T system). Under this system, reporting emitters must obtain an emission allowance to cover each tonne of GHG emitted.
Following the example of other administrations, Québec is granting free emission units to large industrial enterprises subject to the C&T system and engaged in international trade.
This free allowance seeks to mitigate the C&T system’s impact on corporate competitiveness and limit the risk of offshoring industrial activity to countries where carbon pricing is lower.
Indeed, the higher an administration’s carbon pricing is in relation to the rest of the world, the greater the risk of company relocation.
The free allocation rules of the C&T system for the period 2024 to 2030 have been elaborated to consider Québec’s current advance in the realm of carbon pricing in relation to the rest of the world.
Indeed, Québec leads the world in the realm of carbon pricing. To reflect this advance, the annual reduction in the free allocation granted to businesses will be less pronounced in the short term.
On the other hand, the reduction in the free allocation granted will subsequently accelerate gradually until 2030 so that the volume of free allocation granted in 2030 reflects Québec’s climate targets.
To illustrate changes in carbon pricing in Québec compared with the rest of the world, the carbon pricing ratio has been created. This tool represents the ratio between average carbon pricing in Québec and average carbon pricing worldwide. For example, a high ratio means that carbon pricing is more present in Québec than elsewhere in the world.
A technical manual has been produced to explain the detailed methodology to compute the ratio.
The carbon pricing ratio is updated annually to reflect the most recent data available pertaining to carbon pricing worldwide.
Québec’s carbon pricing ratio fell from 6.4 in 2020 to 4.4 in 2021.
This change is explained by the introduction of new pricing systems such as the national carbon market in China and carbon taxes in Germany and the Netherlands, which broadened the presence of carbon pricing worldwide.
It should be noted that the indicator is based on information available on June 30 of each year. Accordingly, it may not fully reflect the impact of recent events, such as the COVID‑19 pandemic.
The following chart indicates the relationship between average carbon pricing in Québec and such pricing elsewhere in the world.
|Average carbon pricing in Québec
Note: Data available on June 30, 2022. The ratio is revised when it is updated annually, depending on the availability of new statistical data.
Sources: International Carbon Action Partnership, Ministère de l'Environnement, de la Lutte contre les changements climatiques, de la Faune et des Parcs, and Ministère des Finances du Québec.
If you have questions concerning the data used to calculate the carbon pricing ratio, please submit them by email to the Ministère des Finances du Québec at firstname.lastname@example.org.