Ministère des Finances
Ministère des Finances
Ministère des Finances
The carbon pricing ratio is an indicator that measures the gap between the Québec economy as a whole and 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. Consequently, 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 (accessible in the “Documentation” section, below) has been produced to explain the detailed method 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 increased slightly from the previous year, rising from 4.4 in 2021 to 4.6 in 2022.
This moderate increase is mainly explained by price effects. In fact, Québec’s carbon price (i.e., the price of a tonne of GHG) increased by 28% in 2022 compared to 2021, going from US$22.24 to US$28.46. In comparison, a 21% increase in the average carbon price was observed in the rest of the world, going from US$17.73 in 2021 to US$21.49 in 2022.
It should be noted that the indicator is based on information available on June 30 of each year. Accordingly, it may not reflect the impact of recent events.
The following chart indicates the relationship between average carbon pricing in Québec and such pricing elsewhere in the world. The downward trend illustrates the implementation in recent years of a growing number of carbon pricing systems in the world.
| Taxation year | Carbon price ratio |
|---|---|
| 2016 | 10.7 |
| 2017 | 9.8 |
| 2018 | 6.9 |
| 2019 | 6.5 |
| 2020 | 6.5 |
| 2021 | 4.4 |
| 2022 | 4.6 |
Note: Data available on December 1, 2023. 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 dmaeic@finances.gouv.qc.ca.