This interview was conducted at the end of November 2025, before Québec’s announcement regarding the 2035 target announcement. cCarbon spoke with Pierre-Olivier Pineau, a full Professor in the Department of Decision Sciences at HEC Montréal and holds the Chair in Energy Sector Management. His academic background includes a Ph.D. in Administration from HEC Montréal and an MA in Philosophy from the Université de Montréal, grounding his work in both analytical and interdisciplinary approaches. His research focuses on energy policy, electricity market design, and decision analysis, with current projects examining the environmental impacts of electricity trading, strategic investment and production in electricity markets, mechanisms for voluntary price increases, and the sustainability challenges within energy and transportation systems. Based at HEC Montréal’s Côte-Sainte-Catherine campus, he remains a leading voice in the study of efficient, equitable, and forward-looking energy systems. The discussion was facilitated by Mitul Kaushal, senior associate, and Gabriel Stoltzfus, market engagement lead at cCarbon.

Key Takeaways

1. There is no political threat to Quebec’s carbon market. There is no active movement toward repeal or dismantling; the system is institutionally stable.
2. Quebec is not pursuing large-scale carbon offsets or removals. CDR activity is limited to early-stage pilots and R&D, with no near-term role in compliance or abatement.
3. Offset protocols may emerge, but deployment will not. The government may create rules enabling CDR offsets but is unlikely to commit meaningful funding or expect material volumes.
4. CDR remains too expensive to function as a compliance tool. Current costs prevent it from serving as a credible offset or market-based mitigation option.
5. There is no momentum toward inter-provincial harmonisation. Despite discussion, no political or administrative process exists to align provincial carbon pricing systems.
6. Policy fragmentation is becoming entrenched. Provincial divergence is now the dominant trajectory in Canadian climate policy.

Setting the Discussion

Mitul Kaushal: There’s a lot happening right now. California recently held its long-awaited workshop on what’s next for the cap-and-trade program, and Washington also held an important workshop focused on changing the program cap. While these developments are understandably drawing attention within the WCI market, we think Quebec has been receiving less focus despite a number of important political and policy developments. Things are changing federally, things are changing at the provincial level, the federal government has partially backed away from carbon pricing, and there are significant developments in Alberta as well.

Quebec Market Notice and Offset Policy

Mitul Kaushal: One of the main outstanding issues in Quebec is the market notice released in October 2024, where the government discussed a potential 17 M inventory adjustment and the possibility of scaling down offset usage. Quebec is one of the largest users of non-DEB offsets from California. Since that notice, a lot has changed both in the US and in Canada. Do you think current policymaking will follow through on those proposals, or do you think a reset is now more likely?

Pierre-Olivier Pineau: I don’t think they will actually follow through on what they initially laid out in the October 2024 letter. I don’t think they will really implement those changes.

• Basically, they will follow what California is doing. If California eventually backs out of these plans, Quebec will follow. If California implements some aspects, Quebec will follow as well.
• The good news for the Quebec cap-and-trade market is that the government did consider, at one point, fully cancelling the program, but they decided not to do that.
• Just yesterday (On 24^th November 2025), the Quebec finance minister released a budget update and officially stated that they are counting on future auction revenues. That is an additional signal that the cap-and-trade market will remain in place. Under the circumstances, that was really what the market needed to know, that the market is staying.
• This matters because, as you mentioned, the federal government has cancelled the carbon tax after April 1 of this year. The output-based pricing system still exists, and there will be updates, but discussions with Alberta are difficult.
• As far as Quebec is concerned, it’s very much a wait-and-see strategy. The government is trying to show the public that it is offering some financial relief. They considered adjusting the carbon price or the fuel tax which are different but in the most recent budget update, they said the relief would come instead from retirement contributions, with less money deducted from salaries. They explicitly stated they would not touch the fuel tax and would not touch the carbon price.
• What is new is that they also announced plans to use the surplus in the Greenhouse Gas Reduction Fund called the Electrification and Climate Fund in Quebec. There is about CAD 1.8 billion in unspent surplus, and they intend to use that money for debt reduction rather than additional emissions-reduction programs. “Ambition and Use of Auction Revenues”.

Mitul Kaushal: So, to reflect that back: cap-and-trade stays, it has political support, but the concern is more about ambition and whether auction revenues will actually be used for abatement?

Pierre-Olivier Pineau: Yes, exactly. They are not cutting existing abatement programs, at least not for now. The issue is that they had unspent money on the fund, and that surplus will be used for debt reduction rather than additional climate action. That decision is controversial. The government has announced its intention, but it still needs to change laws to implement it.

What is not controversial in Quebec is keeping the cap-and-trade system. All major political parties with elected members support it. No significant party has called for cancelling the program.

Signals: California vs Federal Canada

Gabriel Stoltzfus: From a signaling perspective, are policymakers in Quebec looking more to California, or to the Canadian federal government and the backstop system?

Pierre-Olivier Pineau: Mostly California. They don’t really care about the federal backstop or the output-based pricing system. That system mainly affects industrial players, and those industries mostly receive free allocations covering their emissions. These industries include aluminum, steel, cement and are very localized. Aluminum is mostly in Quebec, steel largely as well. So, there’s no strong national alignment pressure. They care about staying linked with California, but they don’t really care about what’s happening elsewhere in Canada.

CBAM and Trade Exposure

Gabriel Stoltzfus: Does that translate into any discussion around CBAM impacts on Quebec’s industrial output?

Pierre-Olivier Pineau: Nobody is really talking about CBAM anymore. The federal government under Justin Trudeau did express interest at one point, but from Quebec’s perspective, I’ve never heard the government say anything about it. If policymakers were being rational, they would try to implement some form of CBAM but it’s simply not being discussed. Transportation, ZEV Policy, and Public Pressure.

Mitul Kaushal: Transportation is often where public pressure shows up first. What’s the latest on ZEV policy and EV subsidies in Quebec?

Pierre-Olivier Pineau: They announced more than a year ago that EV subsidies would be phased out. Some still exist, but by 2027 they will be completely gone.

The ZEV mandate remains, but they changed the rules to make it much easier to generate credits for example, plug-in hybrids now receive full credits, comparable to battery EVs. That effectively addressed industry complaints. There is some public concern, but most people don’t really understand the cap-and-trade system. Media often point out that gasoline prices are higher than in Ontario, but much of that difference comes from the fuel tax, not just the carbon price.

In practice, Quebecers continue to buy large SUVs at record levels. They complain, but behavior doesn’t change much. Politically, it’s not a decisive issue and in the most recent budget update, the government didn’t announce any fuel-tax or carbon-price relief.

Refineries and Supply Concerns

Mitul Kaushal: California is seeing refinery closures framed around environmental regulation. Is anything similar happening in Quebec?

Pierre-Olivier Pineau: No. Quebec has two refineries, and there have been no threats of shutdown. They appear profitable, sales haven’t declined, and fuel consumption remains stable.

Cap-and-trade affected prices somewhat, but not consumption. There’s no pressure to close refineries.

Pipeline discussions are mostly about Alberta. Quebec generally opposes pipelines because they don’t benefit from them and opposes federal money being used for Alberta projects. Quebec also has strong supply security through imports via the St. Lawrence River.

Climate Policy Appetite and Future Caps

Mitul Kaushal: How would you describe Quebec’s climate policy appetite today compared with the late 2010s or early 2020s? And what does that mean for extending the cap-and-trade program beyond 2030?

Pierre-Olivier Pineau: The appetite for climate action is definitely lower now.

That said, there hasn’t been much real behavioral change even when appetite was higher. Emissions reductions have been limited. I expect the cap-and-trade program will be extended, targets will remain on paper, and neutrality goals will be maintained but the allowance surplus will not be addressed.

There are already too many allowances, and I don’t think the government will reduce that surplus. So, compliance will be achieved, but actual emissions targets may not be met. Politically, this allows the government to say they kept the system and the targets while avoiding harder decisions.

Transportation Emissions and Clean Fuel Regulations

Mitul Kaushal: Where do you see transportation emissions reductions coming from cap-and-trade or other policies?

Pierre-Olivier Pineau: Mostly from cleaner fuels and increased EV penetration.

I don’t think cap-and-trade creates a strong enough incentive for people to abandon ICE vehicles. Gasoline prices don’t significantly change behavior. People complain, but they don’t respond.

The causal impact of cap-and-trade on transportation emissions is, in my view, very low.

Carbon Dioxide Removal

Mitul Kaushal: Finally, are there any CDR-related developments in Quebec worth watching?

Pierre-Olivier Pineau: There’s Deep Sky — a Quebec company with pilot projects in Quebec and projects in Alberta. They’re still in R&D. It’s good that they exist, they attract attention, and their approach is interesting. But costs are still far too high for meaningful offsets. What I do expect is that Quebec will create protocols for direct air capture offsets in the near term.

Inter-Provincial Harmonization

Mitul Kaushal: Do you see any near-term steps toward harmonizing provincial carbon pricing systems?

Pierre-Olivier Pineau: No. Nothing is happening. I’m personally very sad about that. I would love to see harmonization, but there is nothing underway.

Editorial note: This series will continue with a further interview focused on Quebec’s carbon policy landscape as part of this series.