California and Quebec sign agreement to integrate, harmonize their cap-and-trade programs

SACRAMENTO — California and Quebec took another step toward
linking their cap and trade programs when representatives of the
two jurisdictions signed an agreement outlining steps and
procedures to fully harmonize and integrate the two programs.
The agreement, in both French and English, was signed for
California by California Air Resources Board Chairman Mary D.
Nichols. Signing for Quebec were the Minister of International
Relations, La Francophonie and External Trade, Jean-François
Lisée and the Minister of Sustainable Development, Environment,
Wildlife and Parks, Yves-François Blanchet.

Signing the agreement is the latest step in a process to link the
two jurisdictions that began more than five years ago. It will be
followed in November by a report to the California Environmental
Protection Agency and Governor Brown on the progress toward
linking. In December 2012, the Government of Quebec adopted a
regulation providing for linkage between the two programs. In
April 2013 the Air Resources Board adopted a regulation setting
January 1, 2014 as the start of the linkage, which will enable
carbon allowances and offset credits to be exchanged between
participants in the two jurisdictions’ programs.

“For more than five years, California and Quebec, along with
other states of the United States and provinces of Canada, have
worked together to address the risks of man-made climate change,”
said Nichols. “We have created and are now implementing the most
advanced and comprehensive programs to reduce the pollution that
threatens our global environment.”

“The collaboration between Quebec and California in the
development of a carbon market on a continental scale is an
excellent example of North American regional cooperation that is
beneficial to all partners, both from an economic and an
environmental perspective. As leaders in the fight against
climate change, California and Quebec advantageously position
their businesses involved in the research and development of new
clean technologies on the world stage. We seek nothing less than
to become an international reference on this issue,” said
Minister Lisée.

“Through this agreement, we continue our positive working
relationship and the process of integrating our programs,” said
Secretary of the California Environmental Protection Agency
Matthew Rodriquez. “In doing so, we enhance the benefits to each
of our peoples and our history of effective cooperation to
achieve a shared goal will provide a model for others to emulate,
not only in North America, but throughout the world.”

“The sale of emission allowances will generate at least $2.5
billion in revenue by 2020 in Quebec. These funds will be fully
reinvested in initiatives to fight climate change, including
facilitating the conversion to renewable energy, promoting energy
efficiency, improving industrial processes, and preparing Quebec
society to adapt to the impacts of climate change. The
electrification of transportation is another major project on
which our government will labor over the coming months,” said
Minister Blanchet.

The linked programs will provide a working model for other states
and provinces that are seeking cost-effective approaches to
reducing their greenhouse gas emissions. The recent announcement
by the U.S. EPA regarding limits on greenhouse gas emissions from
power plants, for example, could lead to state-by-state caps and
a system that would allow them to trade credits with other
similar programs. The California-Quebec arrangement could be the
template for that effort.