Western Climate Initiative Design Recommendations for the WCI

Western Climate Initiative Design Recommendations for the WCI Regional Cap-and-Trade Program December 7 th, 2010 Charles Larochelle Assistant Deputy Minister Water, Air and Climate Change Polies

Outlook of the presentation 1. Introduction : Quebec’s mitigation goals and actions 2. The Regional Cap-and-Trade Program of the Western Climate Initiative as a tool to help achieve long term mitigation goals

1. Introduction Quebec’s mitigation goals and actions

Quebec’s mitigation goals and actions • Summer 2006 2012 Climate Action Plan - 6% below 1990 by 2012 • April 2008 QC joins the WCI as Partner • June 2009 Bill 42 (Cap and Trade) • December 2009 2020 mitigation goal of 20% below 1990 level • December 2010 Regulation on Mandatory Reporting • Winter 2010/2011 Cap-and-Trade Draft Regulation » Cap-and-Trade » New 2013 -2020 Climate Action Plan » International Reductions

2. Western Climate Initiative The Regional Cap-and-Trade Program of the Western Climate Initiative as a tool to help achieve long term mitigation goals

Partners Arizona British Columbia California Manitoba Montana New Mexico Ontario Oregon Québec Utah Washington C&T Partners Observers Four canadian provinces 79 % of the population (2008) 73 % of GDP (2007) Canadian Observers New-Brunswick Nova-Scotia Saskatchewan The Western Climate Initiative

Implementation schedule • February 2007 Creation of the WCI • September 2008 Design Recommendation • July 2010 Detailed Design Recommendations • January 1 st, 2010 Start date for the Mandatory Reporting • January 1 st, 2012 Start date for the C&T Program

WCI Objectives • Comprehensive approach to address climate change and reduce regional GHG emissions • Cap-and-Trade & other complementary policies • Inform and influence both U. S. and Canadian federal governments to take action in reducing GHG emissions

WCI Regional Goal • The regional mitigation goal of WCI partners is to reduce their emissions by 15% below 2005 levels by 2020. The regional goal is the sum of every partner’s individual goal • Each partner is required to set its own medium term reduction goal (2020) Quebec : 20% below 1990 by 2020

The WCI approach • A partner dialogue approach • All decisions are made by consensus • A stakeholder dialogue approach • • Open meetings Face-to-Face consultations Webinar Teleconferences

Scope • From 2010 Threshold • From 2012 Threshold • From 2015 Threshold – Mandatory Reporting – Electricity generation – Combustion at industrial sources and industrial process emission sources – Residential, commercial and industrial fuel combustion – Transportation fuel combustion from gasoline and diesel – 10, 000 tons of CO 2 e per year – 25, 000 tons of CO 2 e per year

Distribution of allowances • Principles –Minimize economic impacts –Prevent competitiveness issues within and between covered sources –Recognize and encourage early reductions • Auctionning • Regional objective of at least 10 % in 2012 and 25 % in 2020

Flexibility Mechanisms and Other features • Three-year compliance periods • Banking is allowed / Borrowing is not allowed • Contingency/Strategic Reserve • Holding limits / monitoring to prevent market manipulation • 3 for 1 penalty in case of non-compliance

Offsets – Offset system as part of the C&T program – – Offset use limited to no more than 49% of the total emission reductions from 2010 -2020 Sources not covered by the program or under the treshold Within WCI, Canada, United States, Mexico and other UNFCC Annex 1 countries Clean Development Mechanism (CDM) • Primary role is to reduce the compliance costs of the Program • Priority: – Agriculture – Forestry – Waste management

Informations WCI www. westernclimateinitiative. org MDDEP Charles Larochelle charles. larochelle@mddep. gouv. qc. ca Robert Noël de Tilly (418) 521 -3868, poste 4343 robert. noeldetilly@mddep. gouv. qc. ca Jean-Yves Benoit (418) 521 -3868, poste 4116 jean-yves. benoit@mddep. gouv. qc. ca