Gas from renewable sources: Quebec targets will cost consumers one billion dollars over four years

• Gas from renewable sources (GRS) costs three times more than conventional natural gas.
• A hospital supplied entirely with GRS would see its energy bill increase by nearly $150,000 annually.

Montreal, April 27, 2026 – Even though the target date has been pushed back, increasing quotas for gas from renewable sources (GRS) will be costly for consumers and do not reflect market realities, argues the MEI in an Economic Note released this morning.

“By imposing higher and higher GRS targets, the government is ignoring price considerations and consumer preferences. Unfortunately, all conventional natural gas consumers will end up paying the price for this costly measure,” says Gabriel Giguère, senior policy analyst at the MEI and author of the publication.

Quotas, but virtually no demand

Since 2020, the Quebec government has imposed increasingly high GRS supply targets on natural gas distributors. For 2025, Quebec’s minimum GRS supply target was equivalent to five per cent of total natural gas consumption. By 2028, this share will rise to seven per cent.

For 2030, the target was set at 10 per cent, but the government recently announced a two-year delay to reach that target, pushing it to 2032.

However, voluntary demand from customers remains far below these targets, even given the delay announced this week.

In 2024–2025, actual demand was only one-fourth of the government’s target.

For 2029–2030, Énergir expects GRS demand to reach 77.2 million m³, while the government target for that year is 425.6 million m³. This represents a gap of 348.4 million m³ between projected demand and the supply level Quebec is attempting to impose.

“What the government is effectively doing is creating an artificial supply of an expensive resource that almost no one wants, and asking all Quebec gas consumers to foot the bill,” adds Mr. Giguère.

As the researcher explains, the additional cost from this imposed but unwanted supply is passed on to all Quebec gas consumers.

Prices at least three times higher

The price of GRS was 94.88 cents per m³ in 2025–2026, compared to 27.81 cents per m³ for conventional natural gas, meaning it’s over 70 per cent cheaper.

This gap would be even larger without the cap-and-trade system for emissions allowances—Quebec’s equivalent of a carbon tax—which adds about nine cents per m³ to the price of conventional natural gas. In other words, without this tax, GRS would cost five times more than conventional natural gas.

This difference directly affects customers’ bills. For example, fully switching to GRS would increase a primary school’s energy bill by $34,251 per year, according to Énergir data. For a hospital, the additional cost would reach $146,188 annually.

This high price explains the lack of consumer interest in GRS. Yet, this lack of demand has not prevented the government from forcing its distribution and spreading the costs across all consumers, including those who have not chosen GRS.

According to data from the Régie de l’énergie, these socialized costs could reach nearly $200 million per year in 2026–2027 and 2027–2028, and exceed $300 million in 2028-2029 and 2029–2030. Over the four-year period, the total cost imposed on consumers would exceed $1 billion.

Notably, the recent announcement to delay GRS supply targets would have no impact on these additional costs, as the delay only affects the following two years.

Quebec should abolish its targets

The Quebec government should repeal the Regulation respecting the quantity of gas from renewable sources to be delivered by a distributor, abandon the objective of supplying the building sector with 100 per cent GRS, and eliminate direct and cross-subsidies to the industry, the researcher argues.

“The government should trust Quebecers to determine which type of energy best meets their needs and budget,” concludes Mr. Giguère. “As long as GRS costs three times more than conventional natural gas, neither quotas nor subsidies will create sustainable demand—they will simply shift costs onto consumers and taxpayers.”

You can read the MEI Economic Note by clicking here.

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The MEI is an independent public policy think tank with offices in Montreal, Ottawa, and Calgary. Through its publications, media appearances, and advisory services to policymakers, the MEI stimulates public policy debate and reforms based on sound economics and entrepreneurship.

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