Carbon pricing ratio

The carbon pricing ratio is an indicator that measures the relationship between the presence of carbon pricing in Québec’s 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.

Objective

Since 2013, Québec has priced its greenhouse gas emissions by means of the Cap-and-Trade System for GHG emission allowances (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 exposed to 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 business 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.

To illustrate how carbon pricing is evolving in Québec compared with the rest of the world, an indicator, called 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.

Annual update of the indicator

The carbon pricing ratio is updated annually to reflect the most recent data available pertaining to carbon pricing worldwide.

Carbon pricing in 2023

Québec’s carbon pricing ratio increased from the previous year, rising from 4.7 in 2022 to 5.7 in 2023.

This variation is mainly explained by:

a 16% carbon price increase (in US dollars) in Québec in 2023 compared to the previous year, while the carbon price in the rest of the world remained stable;
a reduction in GHG emissions covered by a carbon pricing system in Europe, notably resulting from an increase in renewable energy production.

It should be noted that the indicator is based on information available on December 1, 2024. Accordingly, it may not fully 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.

Change in the carbon pricing ratio(ratio between Québec and the rest of the world)

Change in the carbon pricing ratio(accessible version)

Year	Carbon pricing ratio
2016	10.7
2017	9.9
2018	7.0
2019	6.5
2020	6.5
2021	4.4
2022	4.7
2023	5.7

Note: Based on carbon pricing and worldwide GHG emission data available on June 30 and December 1, 2024, respectively. The ratio can be 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.

Documentation

2023 Ratio – Database (in French only)
Carbon pricing ratio – Technical manual
Note: This manual presents the calculation based on the 2019 ratio data, using the most up-to-date information at the time of publication. Certain results presented in this document are therefore no longer up to date.

Contact us

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.