Quebecers face higher fuel costs as the province prepares to launch a cap-and-trade system to regulate greenhouse gas emissions beginning in 2013, Environment Minister Pierre Arcand acknowledged Wednesday.
While the size of the increases remain unclear, he said the new system will prevent wild tax increases by encouraging businesses to innovate to reduce their emissions.
"It's clear that over the coming years there will certainly be increases and consumers need to be ready," Arcand said at a news conference after unveiling a 60-day consultation period.
The program is designed to reduce Quebec's emissions by 20 per cent from 1990 levels by 2020. It will primarily affect about 100 Quebec companies that are responsible for 85 per cent of the province's emissions.
The transportation sector will be added to the system in 2015, but agriculture, forestry and garbage won't be affected.
Quebec is part of a co-ordinated regional effort of the Western Climate Initiative, which also includes Ontario, British Columbia and Manitoba representing three-quarters of the Canadian population and economic activity.
Saskatchewan, Nova Scotia, New Brunswick and the Yukon are observers. The other four provinces and two territories aren't involved.
California leads seven U.S. states that are looking to participate.
Quebec, California and B.C. will be the first jurisdictions to launch the system in 2013 following a one-year transition period. Others are expected to follow a year later.
The Quebec government will allocate emission limits for installations emitting at least 25,000 tonnes of carbon dioxide annually based on a complicated formula.
Credits will be issued to cover some of the limits. Companies can invest to reduce their emissions or purchase offsets from the government or on the public market in participating jurisdictions.
While acknowledging that the change is complex, Arcand said the public wants action on the environment.
"When you have a goal that's so noble as this one, that is designed to make Quebec more green, I think we will work to ensure that the population follows us."
Some businesses and environmental groups prefer a carbon tax. Although simpler, it would have been "punitive" while failing to encourage innovation, added Economic Development Minister Clement Gignac.
He denied that the system will make Quebec less competitive or discourage businesses from investing in the province.
"It will cost a lot more to do nothing, it's an intergenerational question," he said, pointing to the benefits of tackling climate change.
Gignac said history suggests that Quebec can become a specialist in clean technology by being among the first in North America to move down this path.
"We really believe it will become an advantage in fact to move among the first."
Steven Guilbeault of the environmental group Equiterre applauded Quebec's move.
"It's not the solution but it's one tool to fight climate change," he said in an interview.
Europe, Australia and Japan have all pursued similar systems. Quebec has learned important lessons about the allocation of emission credits to avoid affected price changes, he said.
Guilbeault downplayed the risk that other jurisdictions won't follow or that businesses will shun Quebec.
"It's happening everywhere," he said.
Quebec's employer group Le Conseil du patronat has urged the province not to act alone in regulating emissions and welcomed the decision to delay the official start until January 2013.
It wants economic impact studies to be conducted for each of the industries affected by the new regulation and for government to simplify regulatory standards.
"Ultimately, the most important thing for Quebec companies is that the system proposed today has a positive effect on long-term prosperity of Quebec while making sure to maintain the competitiveness of enterprises in each industrial sector," stated council president Yves-Thomas Dorval.
The Quebec Chamber of Commerce said it was also worried about preserving the competitiveness of Quebec industries and asked for an extension in the consultation period.
Arcand said he was willing to add a few weeks but still wanted the transition period to begin next January.