QUEBEC TRIES CARBON TAX

Another noble experiment in emissions reductions. The US should send these folks a “Thank-You” note and a piece of a research institute to help study the implementation. The next big questions: (1) Will the tax be passed on to consumers? (2) How soon? (3) How can the government use the tax revenues to compensate consumers? See Environment Canada for a complete discussion of projected impacts of the carbon tax.

Quebec introduces carbon tax
October 1, 2007 (Reuters via Yahoo News)
and
Quebec sets carbon tax on energy cos.
October 2, 2007 (AP via Yahoo News)

WHO
The Canadian province of Quebec

Projected impact, 1. (click to enlarge)

WHAT
In a move to reduce greenhouse gas (GHG) emissions, Quebec has put into effect a “green” tax on energy companies of 0.8c (Canadian)/liter for gas, 0.9c for diesel fuel, 0.96c for light heating oil, and C$8/tonne for coal.

WHEN
- The “green” tax was proposed in 2006 in conjunction by a Liberal Party government due to growing Canadian concerns over GHGs and climate change.
- Canadian GHGs have risen more since 1990 than any other industrialized country.
- Canada has pledged to cut emissions 6% from 1990 levels by 2012 though PM Stephen Harper’s Conservative Party government will only commit to cutting 20% from current levels by 2020 and 60-70% by 2050.

WHERE
- The tax applies to next exporters of energy based in Quebec.
- 50 companies are expected to be taxed.

WHY
- The tax is expected to raise $200 million/year (Canadian)
- Canadian oil companies are expected to pay $69.1 million/year for gas, $36.1 million for diesel fuel and $43.1 million for heating oil. Natural gas companies will pay $39.1 million annually.
- Utility Hydro-Quebec will pay $4.5 million/year for a thermal energy plant.
- Other fossil fuel consuming industries (cement, mining) face big charges because they are defined as energy distributors as a result of their business activities. Some tax allocations, especially on big businesses, await final decisions on contested issues by the Quebec energy board.

Projected impact, 2. (click to enlarge)

QUOTES
- Pierre Methe, spokesman, Quebec energy board: "We are waiting for the regulation framework we sent in August to be adopted by the government…"
- Carol Montreuil, Canadian Petroleum Products Institute: "Until it's in place and we can actually track the market for so many days or weeks after it's in place, no one knows what is going to happen with this new fee."