Frequently asked questions
Under the cap-and-trade system, the Minister of Sustainable Development, Environment, Wildlife and Parks may hold an emission units sale by mutual agreement by the Minister up to four times per year. There is no pre-set date for these sales and it is at the Minister’s discretion as to whether to hold them. If applicable, a notice is published at least 60 days before the scheduled date of a sale by mutual agreement by the Minister. The notice outlines the rules and conditions pertaining to the sale. Unlike an auction, GHG emission units are offered at a set price, based on three available categories.
GHG emission units made available to emitters during a sale by mutual agreement by the Minister come from the Minister’s reserve, which will be created when the cap-and-trade system for GHG emission allowances is implemented. To accomplish this, 1% will be removed from the 2013 and 2014 emission unit budgets, 4% from the 2015, 2016 and 2017 emission unit budgets and 7% from the 2018, 2019 and 2020 emission unit budgets. When the reserve is created, the GHG emission units made available to emitters are equally divided into three categories (A, B and C).
The settlement price of emission units sold during a sale by mutual agreement by the Minister in 2013 is pre-set: $40 for category A units, $45 for category B units and $50 for category C units. These prices are increased by 5% plus inflation annually since 2014.
During a sale by mutual agreement by the Minister, an emitter may submit more than one bid insofar as each one respects the price that has been set for that category, the amount covered by the bidder’s financial guarantee, and the bidder’s holding limit. All offers remain confidential, and the selling price is the price that has been set for the desired category. Winners will be notified of the number and total cost of emission units they have been awarded. Winners must complete financial settlement within the prescribed time period, failing which their financial guarantee will be used.
Note that sales by mutual agreement by the Minister are not joint sales and that the units put up for sale come from Québec’s reserve accounts.
Participation in sales by mutual agreement by the Minister is reserved for emitters whose general accounts do not have GHG emission units that can be used to cover emissions for the current compliance period.
To participate in a sale by mutual agreement by the Minister, emitters must first open an account with the GHG emissions allowance Compliance Instrument Tracking System Service (CITSS). However, participation in sales by mutual agreement by the Minister is not automatic. Once the account has been opened, the emitter’s account representatives must check the “Auction Participation” box under the “Auction” tab in the CITSS system. This box must be checked prior to each sale by mutual agreement by the Minister in which an emitter wishes to participate. Once selected, the box will remain enabled until an account representative disables it. Account representatives of emitters having indicated their intention to participate in the next sale will receive an email from the Auction Administrator with a link that will enable them to register as users on the auction platform.
Under the Regulation respecting the delegation of management of certain parts of a cap-and-trade system for greenhouse gas emission allowances, some support services for the C&T system’s implementation, including the administration of auctions and sales by mutual agreement by the Minister, have been delegated to the non-profit organization Western Climate Initiative, Inc. This organization signed a contract with Markit, whose primary mandate will be to provide a platform for auctions and sales by mutual agreement by the Minister as well as technical assistance to participating governments – currently Québec and California.
Western Climate Initiative, Inc. signed a contract with Deutsche Bank, which will provide financial and transactional services for auctions and sales by mutual agreement by the Minister carried out by the participating governments - currently Québec and California.
The financial services administrator provides the following services: