In 2016, the Quebec government published the 2030 Energy Policy, Energy in Québec – A Source of Growth.1 The policy is to be implemented in four phases: the first phase consists in amending Quebec’s legal framework and the second, third and fourth phases consist in adopting action plans for 2016-2020, 2021-2025 and 2026-2030. An Act to implement the 2030 Energy Policy and to amend various legislative provisions2 (Implementing Act) was assented to by the National Assembly on December 10, 2016, completing the first phase.
2030 Energy Policy
The new Energy Policy has the following objectives:
- to favour a low-carbon economy
- to optimally develop Quebec’s energy resources
- to foster responsible consumption
- to capitalize on energy efficiency potential
- to promote the entire technological and social innovation chain.
To meet those objectives, five targets have been set using 2013 data:
- enhance energy use efficiency by 15%
- reduce the amount of petroleum products consumed by 40%
- eliminate the use of thermal coal
- increase overall renewable energy output by 25%
- increase bioenergy production by 50%.
The 2030 Energy Policy is needed for Quebec to reach its target of reducing greenhouse gas (GHG) emissions to 37.5% below 1990 levels by 2030.13 Achieving the targets proposed in the 2030 Energy Policy would reduce GHG emissions by 18% of 1990 emissions, or 16 million tonnes of CO2 equivalent, by 2030. These reductions will be on top of those already achieved (8% below 1990 levels in 20144) plus other GHG reductions derived from non-energy sources.
The Implementing Act is divided into four chapters: Chapter I – Enactment of the Act respecting Transition énergétique Québec; Chapter II – Governance of the Régie de l’énergie and renewal of energy supply to consumers; Chapter III – Financing of the electric infrastructure for a shared transportation project; and Chapter IV – Enactment of the Petroleum Resources Act.
This update deals with the first three chapters.
Transition énergétique Québec
A new agency has been created through a new statute called An Act respecting Transition énergétique Québec. Transition énergétique Québec, a legal person and a mandatary of the State administered by a board made up of nine to 15 government-appointed directors, is tasked with supporting, stimulating and promoting energy transition, innovation and efficiency and ensuring their integrated governance.
This agency will coordinate the implementation of and monitor all programs and measures required to achieve the government’s energy targets—a role previously played by the Minister of Energy and Natural Resources.5
Transition énergétique Québec is to prepare an energy transition, innovation and efficiency master plan every five years outlining the programs and measures to be implemented by it and the departments, agencies and energy distributors6 to achieve the government’s energy targets. The government also sets the policy directions and general objectives Transition énergétique Québec must pursue in energy matters. The energy plan must include, in particular, a report on the state of energy in Quebec and the progress of Quebec’s transition; a summary of all programs and measures, including objectives sought, clientele targeted and impact on GHG emissions; the designation, for each program and measure, of a person responsible for implementation; the departments’, agencies’ and energy distributors’ budget estimates and timeframes for carrying out their programs and measures; and the energy distributors’ financial investment toward carrying out the master plan.
In developing and revising the master plan, Transition énergétique Québec is to consult a Stakeholders Panel composed of a maximum of 15 people, appointed by Transition énergétique Québec’s board of directors, who possess special expertise in energy transition, innovation and efficiency.
The master plan is then submitted to the Minister of Energy and Natural Resources, who in turn submits it to the government. If the government deems the plan compliant, Transition énergétique Québec then submits it to the Régie de l’énergie for approval of the programs and measures under the energy distributors’ responsibility and the financial investment needed to implement them.
The master plan becomes effective after the government has approved it and the Régie de l’énergie has given its opinion on it. The departments, agencies and energy distributors are required to implement the programs and measures they are responsible for under the master plan. Transition énergétique Québec can contribute financially to a program or measure through a subsidy or an Investissement Québec loan.
Transition énergétique Québec’s activities are funded out of the energy distributors’ annual contribution as determined by the Régie de l’énergie, the sums from the Green Fund made available to it under an agreement with the Minister of Sustainable Development, the Environment and the Fight against Climate Change, the sums from the Energy Transition Fund placed at its disposal7 and any other amounts it may receive.
Except for certain provisions that entered into effect on January 9, 2017, the provisions of the Act respecting Transition énergétique Québec came into force on April 1, 2017.
Amendment to the Act respecting the Régie de l’énergie and the Petroleum Products Act
Effective December 10, 2016, the Act respecting the Régie de l’énergie8 is amended so the supply plan to be submitted by a holder of exclusive natural gas distribution rights takes into account: (a) the excess transmission capacity the holder considers necessary to facilitate the development of industrial activities, which may not be greater than 10% of the quantity of natural gas that the holder expects to deliver annually; and (b) the quantity of renewable natural gas determined by regulation of the government. Moreover, a definition of “renewable natural gas” has been added to the Act respecting the Régie de l’énergie and reads as follows: “methane from renewable sources with interchangeability characteristics that allow it to be delivered by a natural gas distribution system.”
According to Quebec’s Ministry of Energy and Natural Resources,9 the supply of natural gas to industrial projects that need it will be facilitated by allowing the natural gas distributors (i.e. Gaz Métro and Gazifère) to acquire a maximum excess transportation capacity equal to 10% of the volume of natural gas they plan to distribute. With distribution systems currently at maximum capacity and any additions requiring major investments, new customers previously had to enter into agreements with the gas distribution companies beforehand and provide financial guarantees covering the investments needed to build the required new infrastructure. The financial guarantees could sometimes adversely affect project financing and delays could occur in finalizing such new infrastructures. Allowing excess transportation capacity enables new customers to secure a natural gas supply quickly and avoid the problem of financial guarantees. The cost of this measure will be borne by the users of the distributors’ transportation service but could be minimized by allowing distributors to resell the surplus capacity on the secondary market.
The Ministry of Energy and Natural Resources10 is of the view that requiring the quantity of renewable natural gas to be included in the supply plan will quicken the pace of renewable natural gas production project development in Quebec. In the past, the amount charged for renewable natural gas could not be higher than the amount charged for fossil natural gas. From now on, distributors should enter into agreements with renewable natural gas producers and those producers could benefit from a price premium that would help turn otherwise unprofitable projects into profitable ones. The additional cost will be borne by consumers.
The Petroleum Products Act11 was also amended as of December 10, 2016, to give the government the power to determine, by regulation, standards and specifications relating to any petroleum product. Such standards and specifications may, in particular, include quality standards and prohibit or require the presence of certain elements in a petroleum product and prescribe the acceptable quantity or proportion of those elements. Also, a clarification is added to specify that a regulation setting standards for the integration of renewable fuels into gasoline and diesel may be made by the government only following a joint recommendation by the Ministry of Energy and Natural Resources and the Ministry of Sustainable Development, the Environment and the Fight against Climate Change.
The aim of these amendments to the Petroleum Products Act is to allow the Quebec government to set targets for the integration of renewable fuels into gasoline and diesel fuel. The federal government already has its own requirements in this regard: under the Renewable Fuels Regulations,12 the quantity of renewable fuel must be at least 5% in gasoline and at least 2% in diesel fuel13 for a primary supplier.14 British Columbia, Alberta, Saskatchewan, Manitoba and Ontario have each adopted regulatory standards that are equal to or exceed the federal government standards for renewable fuel content in fossil fuels.
By adopting the Quebec standards, the Quebec government intends to ensure that renewable-fuel volumes are fully mixed inside the province’s borders. Quebec intends to start by adopting the same standards as the federal government and to then, gradually increase them on the basis of renewable fuel production capacity. 15
Amendments to the Hydro-Québec Act
The Hydro-Québec Act16 is amended to allow Hydro-Québec to grant financial assistance to a public transit authority or to the Caisse de dépôt et placement du Québec or one of its wholly owned subsidiaries to defray the costs of the fixed equipment necessary for the electrification of shared transportation services. The financial assistance must be authorized by the government, on the joint recommendation of the Minister of Energy and Natural Resources and the Minister of Sustainable Development, the Environment and the Fight against Climate Change. This provision came into force on December 10, 2016.
By passing the Implementing Act, the National Assembly has provided the Quebec government with the legislative framework needed to implement the 2030 Energy Policy. The regulations and the first action plan covering the years 2016 to 2020 are still pending adoption. The successful implementation of this policy is, among other things, essential to reach the GHG emissions reduction target set for 2030 of 37.5% below 1990 levels.
3 OIC 1018-2015 dated November 18, 2015.
4 According to the last available GHG emissions inventory for Quebec.
MINISTÈRE DU DÉVELOPPEMENT DURABLE, DE L’ENVIRONNEMENT ET DE LA LUTTE CONTRE LES CHANGEMENTS CLIMATIQUES. Inventaire québécois des émissions de gaz à effet de serre en 2014 et leur évolution depuis 1990, 2016, 32 pages. http://www.mddelcc.gouv.qc.ca/changements/ges/2014/Inventaire1990-2014.pdf.
5 Sections 69 to 71 of the Implementing Act amends An Act respecting the Ministère des Ressources naturelle et de la Faune (CQLR, c c M‑25.2) by eliminating paragraphs 14 and 14.1 of Section 12 of that Act relating to energy efficiency and innovation and the energy efficiency and innovation component of the Natural Resources Fund.
Sections 60 to 65 of the Implementing Act amend An Act respecting energy efficiency and innovation (CQLR c E-1.3), renamed An Act respecting energy efficiency and energy conservation standards for certain electrical or hydrocarbon-fuelled appliances, the application of which will continue to be under the responsibility of the Minister of Energy and Natural Resources. The first two divisions of Chapter I of that Act, which deal with the minister’s powers in matters of energy efficiency and innovation, are repealed. The content of the Act now essentially boils down to the power to determine, by regulation, energy efficiency and energy conservation standards for certain appliances; no such regulation exists at this time.
Sections 80, 81, 82, 84, 85, 87 and 88 of the Implementing Actsets out transitional measures ensuring the transfer of what formerly fell within the purview of the Bureau de l’efficacité et de l’innovation énergétiques (office for energy efficiency and innovation) and the role of the Ministry of Energy and Natural Resources in energy efficiency and innovation matters to Transition énergétique Québec.
6 “Energy Distributor” is defined in Section 7 of An Act respecting Transition énergétique Québec and includes, inter alia, Hydro-Québec, a natural gas distributor and a fuel distributor as defined in that Act.
7 The Energy Transition Fund is established by Section 250 of the Implementing Act, which amends the Act respecting the Ministère des Ressources naturelles et de la Faune. That section came into force on April 1, 2017, pursuant to Order-in-Council 226-2017 dated March 22, 2017. The sums credited to the Energy Transition Fund include, among other things, fees and royalties under the Petroleum Resources Act (this Act is not in force) and the fines paid under An Act respecting energy efficiency and energy conservation standards for certain electrical or hydrocarbon-fuelled appliances.
8 CQLR, c R-6.01.
9 MINISTÈRE DE L’ÉNERGIE ET DES RESSOURCES NATURELLES. Analyse d’impact réglementaire, Loi concernant la mise en œuvre de la Politique énergétique 2030 et modifiant diverses dispositions législatives, June 2016.
11 CQLR, c P-30.01.
13 The standards have been applied in Quebec since December 15, 2010, for gasoline, and since January 1, 2013, for diesel fuel.
14 The primary supplier is the person who owns, leases, operates, controls, supervises or manages the facility where the gasoline or diesel fuel is produced, or, in the case of imported gasoline or diesel fuel, the importer.
15 MINISTÈRE DE L’ÉNERGIE ET DES RESSOURCES NATURELLES. Analyse d’impact réglementaire, Loi concernant la mise en œuvre de la Politique énergétique 2030 et modifiant diverses dispositions législatives, June 2016.
16 CQLR, c H-5.