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Compliance

A compliance period is a period at the end of which an emitter subject to the Regulation respecting a cap-and-trade system for greenhouse gas emission allowances must submit to the government a number of GHG emission allowances equal to the total verified GHG emissions that the emitter reported for the period. In other words, they must give the government one emission allowance for every ton of GHGs they emit into the atmosphere during the compliance period.

On November 1 following the end of a compliance period (or if that is not a business day, on the first business day that follows), covered emitters must have a number of emission allowances in their compliance accounts that is at least equivalent to the verified GHG emissions for all their establishments subject to the C&T during the period in question.

Emitters can obtain emission allowances in a variety of ways in order to cover their GHG emissions. They can acquire emission units at auctions or, under certain conditions, at sales by mutual agreement by the Minister. They can also purchase emission allowances from other emitters or cap-and-trade participants. Early reduction credits (issued only once, in January 2014) and offset credits may also be used to cover their GHG emissions. Emission-intensive trade-exposed emitters, given the potential impact of cap-and-trade system on their production costs and their limited capacity to transfer their carbon cost to their clients, receive allocation of emission units without charge.

The Québec cap-and-trade system for GHG emission allowances provides for three compliance periods for the 2013-2020 period.

First compliance period

The first compliance period began on January 1, 2013, and ended on December 31, 2014. During this first compliance period, around 80 establishments, mainly in the industrial and electricity generation sectors, were subject to the cap-and-trade system. Exceptionally, this first period lasted two years, whereas subsequent periods each extend over three years.

Emitters subject to the cap-and-trade system during that first compliance period had until November 2, 2015 to remit to the government the number of emission allowances corresponding to their declared and verified emissions for the years 2013 and 2014. All emitters subject to the C&T met their regulatory compliance requirements.

Second compliance period

The second compliance period began on January 1, 2015 and ended on December 31, 2017. During that period, many business operators in Québec that distribute fuel or import it for their own consumption (e.g., gasoline, diesel fuel, propane, natural gas and fuel oil, with some exceptions) joined the number of companies subject to the cap-and-trade system.

Emitters subject to the cap-and-trade system during that compliance period had until November 1, 2018 to remit to the government the number of emission allowances corresponding to their declared and verified emissions for the years 2015, 2016 and 2017. All regulated emitters surrendered the necessary allowances to cover their greenhouse gas emissions.

Third compliance period - ONGOING

The third compliance period began on January 1, 2018 and will end on December 31, 2020. During this period, an emitter operating an establishment that is not subject to the cap-and-trade system can request that the establishment opt-in if the establishment meets the established eligibility criteria. The establishment will then be added to the list of establishments subject to the cap-and-trade system. Emitters subject to the system during that compliance period will have until November 1, 2021 to remit to the government the number of emission allowances corresponding to their declared and verified emissions for the years 2018, 2019 and 2020.

Post 2020 compliance period

Subsequent compliance period procedures will be identical to those of the third period: they will begin on January 1 following the end of the previous period and will continue for three years each. Emitters subject to the cap-and-trade system during that compliance period will have until November 1 following the end of the compliance period or, if that day is not a business day, the first day that follows to remit to the government the number of emission allowances corresponding to their declared and verified emissions for the three years included in the period.

For additional information about compliance, see the CITSS User Manual – Volume 6: Compliance Management PDF, 1.2 MB).

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