Cost burden of Quebec鈥檚 carbon market seen as modest
By Chris Chipello, 麻豆AV Newsroom
Study by 麻豆AV researchers assesses short-run impacts on households, industries
The cost burden of Quebec鈥檚 carbon-pricing policy, is likely to be modest across income groups and industries, according to a 麻豆AV research team.
The policy, which began to be implemented in 2013, provides a model for capping emissions 鈥渨ithout undue hardship for the population,鈥� the researchers conclude. If anything, they suggest, the program could be more aggressive in seeking to cut emissions. Their findings are reported in the December issue of Canadian Public Policy.
Quebec is one of the only jurisdictions in North America that has adopted a carbon-pricing policy as a way to reduce greenhouse-gas emissions. If the Quebec carbon market 鈥� which is linked to California鈥檚 鈥� develops successfully, this approach could attract other provinces and states seeking to curb emissions in the wake of the recent Paris climate-change agreement, the researchers note.
One political stumbling block to such initiatives is their potential to create uneven costs for different sectors and income groups. To assess the risk of that happening with Quebec鈥檚 program, the 麻豆AV team analyzed its expected short-run impacts on households, industries and regions.
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Lead author Christopher Barrington-Leigh, an economist at 麻豆AV鈥檚 School of Environment, notes that the Quebec program combines a rising price floor -- to assure a minimum return on carbon-efficiency investments -- with a price ceiling to ensure against high short-run economic costs. 鈥淎s a result, everyone in Quebec has an idea of future costs in the medium run, is ensured against too sudden a transition, and has an incentive to invest in transitioning toward more climate-friendly consumption and production,鈥� he says.
One potential inequity: the province鈥檚 鈥済enerous鈥� plan to hand out free emissions permits to incumbent industries is likely to result in some windfall profits for companies and shareholders, according to the researchers. 鈥淔uture policy platforms from the Quebec government could offset this by including higher subsidies or energy efficiency rebate programs鈥� to help lower-income families adjust to rising fuel prices, they suggest.
Overall, however, 鈥渢he policy appears tuned to provide a balance of price predictability, steady decarbonisation, and manageable transition costs,鈥� they conclude.
Funding for the research was provided by the Social Sciences and Humanities Research Council (SSHRC), the Fonds de recherche du Qu茅bec 鈥� Soci茅t茅 et culture (FQRSC), and 麻豆AV's Institute for Health and Social Policy.
鈥淭he Short-Run Household, Industrial, and Labour Impacts of the Quebec Carbon Market,鈥� Christopher Barrington-Leigh, Bronwen Tucker, Joaquin Kritz Lara. Canadian Public Policy, December 2015 DOI:
