Quebec takes the plunge with California to swap carbon emissions permits

Asif A. Ali / flickrMontreal at sunset: Quebec’s economy is about one-sixth that of California.

Quebec has emerged as California’s first full-blown partner in the carbon trading program that ramps up later this year. That means that, pending final approval next month, when the two governments issue their first round of greenhouse gas pollution permits in November, industrial buyers will be able to use them both interchangeably.

Mary Nichols, who chairs the California Air Resources Board and heads implementation of the program, says the move, “provides more options to California businesses and lays the groundwork for other partners to join with us.”

Most other potential partners maintain only a paper presence in the so-called Western Climate Initiative, a regional carbon trading pact that was designed to create a regional carbon market. Nichols, who’s on record saying that California would not “go it alone” in cap-and-trade, can breathe a small sigh of relief today. But Quebec is a relatively tiny partner, with economy one-sixth the size of California’s.

“It’s a demonstration that you can work out all the technical details and difficulties of linking two very different economies with each other, and create a tradeable instrument,” Nichols told me by phone today,  “It’s an ambitious attempt,” she conceded, but “an important step toward a global solution.”

Nichols declined to predict what U.S. state might be the first to join hers aboard the carbon-trading bandwagon–or when, but she predicted there might be some movement after November’s presidential election, and pointed to progress in three other Canadian provinces and recent legislation in Mexico, which she thinks sets the stage for a “vibrant potential North American market.” She says she’s optimistic that Ontario and British Columbia might join within a year or so.

Cap & trade remains a controversial policy, under which businesses pay fees to exceed their allotted carbon emissions, and can buy and sell credits among themselves, so long as total emissions don’t exceed a state-imposed “cap.” The concept has been opposed by both heavy industry and some environmentalists.

Québec’s minister for Sustainable Development, Environment and Parks, Pierre Arcand, said in a prepared statement that, “Climate change is a global issue that must be addressed by all levels of government.” Arcand added that he’s, “optimistic” that his province’s link with California “will be followed by many other partners.”

Today’s announcement triggers a 45-day public comment period in California, after which the Air Board is expected to formally adopt the linkage in June.The first linked auction between California and Quebec is scheduled for November, with a dry run in August.