Quebec finds itself isolated in terms of environmental taxation, maintaining a carbon price on gasoline and natural gas for households, while the federal government ended visible carbon pricing on fuels in other provinces. This follows Ottawa’s decision in April 2025 to repeal the federal fuel charge, refocusing national regulatory architecture on industrial sectors.
The Cap-and-Trade System for Greenhouse Gas Emissions (SPEDE), in force in Quebec since 2013, continues to impose a direct cost on consumers. Linked to the California market through the Western Climate Initiative (WCI), SPEDE prevents any unilateral reduction in its price floor, currently around CAD40/t of CO₂, equivalent to about CAD0.11/litre of gasoline.
A burden concentrated on households
According to a study by the Institut du Québec, the annual cost of Quebec’s carbon pricing ranges between CAD60 and CAD575 per household, depending on energy consumption profiles. The financial pressure is especially high for rural households or those dependent on natural gas for heating. In contrast, the impact on most consumer goods remains marginal, given the limited diffusion of the carbon cost in local supply chains.
Urban areas, better equipped with public transport and electric heating infrastructure, are much less affected. This geographical disparity fuels a sense of territorial inequity among peripheral populations, who often rely more heavily on personal vehicles.
Contested use of SPEDE revenues
The Electrification and Climate Change Fund (FECC), which collects auction revenues from SPEDE, lies at the centre of ongoing political tensions. Bill 7 proposes to redirect these surpluses toward the Land Transport Network Fund (FORT), including road infrastructure traditionally excluded from the climate funding scope.
Public transit groups and institutional stakeholders argue that this reallocation undermines the very principle of carbon pricing. They highlight the risk of eroding SPEDE’s legitimacy if its revenues are used to finance infrastructure that the system aims to render less attractive over time.
Impacts on businesses and markets
Maintaining a carbon price at the pump creates a price differential with neighbouring provinces, potentially encouraging cross-border purchasing behaviours. Fuel distributors near provincial borders may face volume losses, while transport fleets seek to optimise their energy logistics.
In the industrial sector, SPEDE pressure is steering investments toward lower-carbon technologies. Companies subject to the system, particularly in cement, aluminium, and gas sectors, must now integrate an internal carbon price into long-term business planning.
Political risk and social perception
The combination of a moderate but steady increase in carbon prices and a contested revenue allocation is heightening tensions around the social acceptability of the system. Quebec households, alone in Canada to bear a visible price at the pump, are increasingly sensitive to perceived disparities with the rest of the country.
The Quebec government must balance maintaining its climate credibility under the WCI with internal pressures to ease perceived economic burdens. Any decision to reallocate climate revenues or alter SPEDE could directly impact Quebec’s attractiveness for long-term energy investments.
