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A surprise of 500 million in the coffers of Quebec



Carbon market revenues boost government’s ‘green fund’

(Quebec) The Legault government is pocketing 500 million more than expected in its “green fund” due to an upturn in the carbon market, which partly explains the soaring price of gasoline. He will take advantage of this windfall to finance new environmental measures in his budget which will be tabled on Tuesday, learned The Press.

Quebec expected to raise $800 million in its Electrification and Climate Change Fund – formerly called the Green Fund – in 2021-22 to finance its Plan for a Green Economy. But surprise: revenues related to the carbon market are more like 1.3 billion.

This additional leeway comes in the middle of an election year and makes the portrait of public finances even brighter for Québec. Remember that even if the Ministère des Finances is still predicting a deficit of $6.8 billion for the current year, it is posting a surplus of $1.5 billion after eight months of the fiscal year due to the performance of the Quebec economy.

Significant increase

The kitty was formed due to a significant increase in the price of the right to pollute. The last few months have been marked by inflation: the grocery basket has cost more, as have rents or real estate. But this is nothing compared to the ton of greenhouse gases paid by polluting companies during the Quebec-California carbon market auctions: the price jumped 63.9% from May 2021 to February 2022.

This increase has a direct impact on the wallets of Quebecers. Fuel distributors buy the rights to pollute, then pass the cost on to consumers.

At the February auction price, for motorists, this translates into the equivalent of a tax of 8.6 cents per liter, according to the calculations of Professor Pierre-Olivier Pineau, holder of the Chair in management of the energy sector. energy at HEC Montreal.

According to our information, Quebec will fund new measures in its Plan for a Green Economy, and additional measures have already been authorized. The Minister of the Environment, Benoit Charette, will update his plan a few weeks after the tabling of the budget, taking into account their impact on the reduction of GHG emissions in Quebec, in particular.

To finance its green plan, Quebec also planned to inject additional sums itself, including nearly $300 million in 2022-2023. When announcing its 2021-2026 climate change framework policy, Quebec planned to invest 4.1 billion “from carbon market revenues”, and 2.1 billion “added in budget appropriations”. “These additions represent a 50% increase in funding compared to carbon market revenues,” it was explained. It remains to be seen whether these credits will be maintained, reduced or increased, in addition to the additional contribution of the carbon market.

It is also impossible to know exactly the surplus accumulated in the Electrification and Climate Change Fund. As of March 2020, it had accumulated surpluses of 1.7 billion. In 2021, this surplus was 1.445 billion.

More flexible structure

This unspent kitty was however harshly criticized by the Legault government, which, when it came to power, said it wanted to use these “dormant sums” as soon as possible. “The sums that are currently dormant, I cannot accept that for long. The sums must be used effectively to reduce greenhouse gases, ”we said in 2018.

The Ministry, however, explains that a new structure makes it possible to avoid the accumulation of these surpluses which have historically weighed down the effort to fight against climate change in Quebec.

With this flexibility, it can during the year reallocate money that was intended for a less popular program than expected. Officials monitor expenditures in each of the programs funded by the Green Economy Plan each month, and can thus prevent surpluses.

However, the question of the Fund’s transparency resurfaced. On Wednesday, the Ministry of the Environment finally tabled its 2019-2020 report on the Green Fund, which was signed by Deputy Minister Marc Croteau on December 8. And surprise: the auditor general issues a “reservation” on the audit of its financial results. She wonders about the administrative costs that the Department is reimbursed by the Fund.

“I have not been able to obtain all of the sufficient and appropriate audit evidence concerning the reality of a significant part of the management fees related to the performance of the activities and the administration of the Fund”, writes- her in the document.

“For a portion of these fees, i.e. 18.2 million, we did not obtain sufficient supporting documents to be able to determine whether this amount of management fees should have been charged to the Green Fund as of March 31, 2020”, explained Andréane Lespérance, head of communications for the Auditor General of Quebec, to The Press. This is a recurring problem, since the watchdog had found 30 million in unjustified administrative expenses the previous year.

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