A fast-growing but still perfectible market
For over 30 years, carbon credits have been a key instrument in the fight against climate change. By enabling companies to invest in environmental projects in exchange for offset credits, they offer a flexible solution for contributing to carbon neutrality.
However, this mechanism is often criticized. Some denounce a lack of transparency and fear that it will be used as an excuse to avoid direct emissions reductions. Others point to inconsistencies in the regulation of carbon credits, notably between voluntary and regulated markets.
Despite these challenges, an in-depth analysis shows that carbon credits play a crucial role in the energy transition. They make it possible to finance projects that would not otherwise have seen the light of day, and to accelerate the reduction of GHG emissions, particularly in sectors where decarbonization solutions are still limited.
A complementary tool for achieving carbon neutrality
Carbon credits should not be seen as an alternative to reducing emissions at source. On the contrary, they play a complementary role by financing projects that would not otherwise have been possible.
When properly supervised, they represent an important lever for the energy transition, particularly for companies that do not yet have access to large-scale GHG reduction technologies.
The challenge of capital flight and its impact on the local economy
The report highlights a major problem: capital flight to foreign carbon credits. Currently, a large proportion of offset credits purchased by Quebec companies come from California, representing an annual economic loss of around $130 million.
If these funds were invested locally, they could finance Quebec projects and support innovation in emissions reduction.
The need for transparency to enhance market efficiency
The additionality of carbon credits is a key issue. To be effective, these credits must guarantee that the projects financed actually reduce emissions, and not simply compensate for a lack of regulation.
Recent efforts, notably those framed by COP29, seek to strengthen the traceability and integrity of the carbon market. These measures could improve business confidence and encourage more players to commit to offsetting.
Carbon credits are neither a miracle solution nor a brake on decarbonization. Properly used, they can accelerate the energy transition and finance local projects.
Quebec has every interest in strengthening its voluntary market, limiting capital flight and guaranteeing the transparency of offset credits.
🔗 To find out more, read the full report commissioned by Will Solutions (by Delorme Lajoie Consultation)
The latter sheds essential light on these issues and highlights the opportunities and challenges of the carbon market in Quebec.
Report authors : François Delorme, Minh Nguyen.
On behalf of Will Solutions.