Quebec becomes only province with a price on carbon, but it might not last

CBC

01-04-2025

As Quebec becomes the last province in Canada that hasn't abandoned carbon pricing, the provincial government could start feeling pressure to align itself with the rest of the country.
There has long been a broad consensus in Quebec on the need to reduce greenhouse gas emissions, and the province's cap-and-trade system, launched in 2013, has never been especially controversial.
But some say Prime Minister Mark Carney's decision to scrap the federal consumer carbon price could change that — especially once Quebecers notice the difference at the pump.
As of Tuesday, the federal carbon price, which applied in most provinces and territories, has officially been scrapped.
British Columbia, which was the first province to impose its own carbon price in 2008, has also repealed its tax.
Asked Monday about whether he should act in kind, Premier François Legault said he would wait to see the outcome of the April 28 federal election.
"We definitely have to be competitive," he told reporters during a trip to Germany.
He added that Quebec's cap-and-trade system "ultimately costs less for the consumer" than the federal carbon price did.
With the federal measure now gone, however, critics of carbon pricing say it's only a matter of time before Quebecers start to feel pain at the pump.
"When we compare prices between Gatineau or Montreal and Ottawa ... that difference is going to be striking," said Carol Montreuil, a vice-president with the Canadian Fuels Association.
"I think a lot of people are going to be questioning whether maybe it's time to put a pause on that [cap-and-trade] system."
He said many Quebecers will be "looking at the government for a break," especially with the added burden of U.S. President Donald Trump's tariffs.
It's hard to predict exactly how Quebec gas prices will compare to the rest of the country in the absence of the carbon price.
In 2024, the federal levy accounted for 17.6 cents per litre of gas. Quebec's cap-and-trade system, which is linked to California's, currently costs around 10 cents per litre.
But Pierre-Olivier Pineau, chair of energy sector management at HEC Montreal, the business school of Université de Montréal, cautioned that people outside Quebec won't necessarily see gas prices drop by a full 18 cents on Tuesday.
"At least for a transitional period, the distributors and the service stations will keep a larger profit margin," he said.
Will Quebecers notice?
On March 31, the website GasBuddy.com showed Quebec as having an average gas price of around $1.53 per litre — among the lowest in the country. The average price in B.C. was a full 25 cents higher, around $1.78 per litre.
One thing is clear, said Nicolas Gagnon, Quebec director of the Canadian Taxpayers Federation. "Quebec will be going from one of the places where gas is relatively affordable right now to one of the places where the price is the highest in the country," he said.
Gagnon is hoping to seize this "window of opportunity" to pressure the Quebec government to abolish its carbon price.
But Normand Mousseau, a physics professor at the Université de Montréal and scientific director of an energy institute at the university, pointed out that no major political party in Quebec has come out against the cap-and-trade system.
He said it's unlikely Quebecers will pay much attention to gas prices in neighbouring provinces.
"There's a consensus in Quebec that climate issues are real and we must do something," he said. "So I find it hard to see it becoming a political issue right now."
Pineau said if the government does start to feel pressure on carbon pricing, it could always choose to redirect some of the revenue from the carbon market to taxpayers.
Currently, the money goes to Quebec's electrification and climate change fund, to be spent on programs that reduce emissions.
That's another way Quebec's carbon price is distinct from the federal system, which returned most of the revenue directly to households.
But Pineau added that one of the reasons Quebec's cap-and-trade system hasn't become a political lightning rod may just be that it's more complicated than a carbon levy, and the cost is less obvious.