“The Western Climate Initiative (WCI) is a collaboration of independent jurisdictions working together to identify, evaluate, and implement emissions trading policies to tackle climate change at a regional level. This is a comprehensive effort to reduce greenhouse gas pollution, spur investment in clean-energy technologies that create green jobs and reduce dependence on imported oil.”
What does this regulation say about the province of Quebec to the rest of the world?
It would be fair to see say that the province of Quebec has not been projecting a very cosmopolitan image to the world at large in recent times. Taking part in the Western Climate Initiative (WCI) – the North American effort to push forward with emissions reduction efforts in the wake of the failed Kyoto Accord – is something that most US States and Canadian Provinces have done in the years leading up to its ratification. In a very surprising turn of events the only 2 jurisdictions to stick to the commitments they made, at least initially, are California and Quebec.
How will this regulation affect Quebec businesses?
The WCI is a Cap and Trade regime. This means there is an initial emissions audit across the board and then the Cap will be progressively lowered in the years ahead. Those who successfully adjust their energy efficiency and resulting emissions will potentially generate excess credits they can sell. They will almost always experience a reduction in operating costs and in turn provide and sometimes get a reasonable return on investment with new technologies. Those who do not adapt and remain constant in their levels of regulated emissions will purchase emission allowances. This is a compliance period where at the end of the period a “regulated emitter must return to the Gouvernment a number of emission allowances equal to the total audited GHG emissions that it declared for that period. This will be harmonized with California and indeed to some degree with EU and other similar regimes.
There is clearly a political side to all of this. There is strong public support in Quebec in favour of this direction – there is very little opposition to this direction but it remains to be seen what methods the province will use to try and further the capability to meet the challenges of the WCI laws taking effect in Quebec January 2013. I do think there will be a period of understanding and adoption that will be “bumpy”. Where there is change there is always opportunity.
What industries will it affect the most?
There is not as much manufacturing and transformation of primary materials in Quebec as there once was. We do nonetheless have emissions producing activities in mining, cement, pulp and paper and, of course, transportation. There is also very significant use of diesel fuel used to power activities that are off-the-grid, particularly in the North. The reality of a Cap and Trade is all businesses are subject to the process.
By definition the credits of each gas are equal irrespective of locale. The truth is that the most harmful emissions concentrate in proportion to human activity – with much higher levels of NOx and SO2 in advanced economies (i.e. more cars). The result is heavy emitters in urban settings will have the biggest challenge, where safe concentration thresholds are surpassed on a frequent basis. People are beginning to realize the linear relationship between these harmful gases and respiratory and heart disease rates. There are some amazing materials and system advances underway – with a technology frontier for neutralizing emissions being stimulated by the WCI framework.
Do you think it will attract or be a deterrent to businesses to Quebec?
I think it will attract businesses who need long term access to cheap electricity (ultimately all of the cost gets piled into electricity costing). I think there will also be a significant potential development of the clean energy sector both on the innovation side and in any number of service businesses. With the shameful state of the Quebec construction and engineering sector it is unlikely that these firms will automatically inherit this work. Rather a host of new kinds of enterprises are coming up to provide green engineering and are also seeing a host of tech companies attracted from outside QC.
Where else is the Cap and Trade regulation in practice?
There is a Cap and Trade regime in the EU. There is also a long and successful tradition of Cap and Trade in the US – with the Clean Air Act of the 1970’s. Imagine what the air would be like if this great act of civilization had not been made? For Instance, the cars manufactured 20 years ago are 20 times more polluting than the ones today.
It is fair to say that other countries have a significant lead over Canada when it comes to containing their carbon footprint per capita. There has also been enormous investment in the clean energy sector internationally – we are far behind in this regard. Through real innovation companies will achieve sustainable competitive advantage and by taking part in the global effort to use resources more wisely it may increase revenue with markets that share similar values.
What is clean tech and what is its future looking like in Quebec? How about the rest of Canada?
Cleantech is the sector of technology development whose constituents have solutions that deliver improvements in energy efficiency and/or emissions abatement. Quite often there is a component of design elegance and common sense use of locally available power systems. There is also a lot going on in Cleantech in relation to the way we build our dwellings and businesses, with things such as the LEED standard becoming de rigueur.
Quebec is a hotbed of post-secondary enrolment – a fertile ground for technologists. There is also a more forceful entrepreneurial spirit in Quebec – with fewer large employers to make things happen. Finally, there is an environmental political will with the Quebec population but there have not been previously such a forceful need to look at energy and environment issues by industry at large.
It would take commitment and collaboration to achieve the kind of things Germany, Japan and others have when it comes to evolving power systems. We are seeing leadership in places like St. Laurent where there is evidence of planning industries in such a way that thermal and chemical synergies can be purposely exploited in the way infrastructure and industrial locations are conceived. Quebec will be a part of this putting it’s best foot forward at the Eco Campus Hubert Reeves and should derive some prime mover advantage as well as an unprecedented bond and link with California, where technology innovation knows no equal.
If Quebec adopts a smart microgrid with intelligent pricing mechanisms that will limit domestic use of electricity and export the excess, the future of our economy could take the shape of say Norway. Gone are the days when the complexity of these issues will allow them to remain unrealized. The aggressive electrification of vehicles infrastructure buildout in QC alone – means more granular control of power loads is already a requirement. This opening of the micro power market is a major shift in the way we think of about power – by adding the prospect of selling yours back when it pays to do so.
Quebec is leading Canada in its commitment to the WCI and is positioned to make use of strong technology and software resources. The Eco Campus Hubert Reeves is a well timed buildout of capacity and resources for the CleanTech sector in the Montreal area. While they will no doubt take some time to take root, the new regulations will ultimately result in a changes in the technology & methods industry selects; those who step up to this opportunity/challenge will benefit.