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Quebec's Energy Minister Jonatan Julien.Jacques Boissinot/The Canadian Press

Premier François Legault’s Coalition Avenir Québec government won plaudits from environmentalists last month by passing legislation to ban oil and gas production, despite opposition from industry players who argued the province was forfeiting billions of dollars in potential royalties amid European efforts to find alternatives to Russian fossil fuels.

Quebec’s National Assembly voted 96 to 0 to adopt the law, which provides for $100-million in compensation to five companies whose existing oil and gas leases in the province are being cancelled by the government. Ten MNAs belonging to the leftist Québec Solidaire, who opposed offering any compensation at all, abstained from voting on the bill.

Energy Minister Jonatan Julien insisted that the new law provides Quebec “with an opportunity to reinforce its positive image,” telling the National Assembly: “Our nation is positioning itself internationally by spotlighting our green-economy commitments and, most of all, by demonstrating that those commitments are supported by clear and ambitious legislative actions.”

Several years ago, oil and gas producers hoping to exploit the province’s abundant shale gas reserves in the St. Lawrence River valley began staking claims in the region. In 2014, the Parti Québécois government gave the greenlight to a public-private partnership to explore for shale oil on Anticosti Island. But the projects were put on hold when a subsequent Liberal government slapped a moratorium on natural gas projects and pulled the plug on the Anticosti initiative.

Industry had hoped that Mr. Legault’s CAQ might lift the moratorium. Instead, it has gone even further by banning oil and gas exploration and production outright. The move follows Quebec’s decision last year to join the Beyond Oil and Gas Alliance, led by Denmark and Costa Rica, a group of countries and subnational governments committed to ending fossil fuel production.

The bill implementing the ban was tabled in February, only days before Russia’s invasion of Ukraine. Existing permit holders, led by Calgary-based Questerre Energy Corp. and Montreal-based RessourcesUtica, urged the government to reconsider the move in light of surging fossil fuel prices and European efforts to end the continent’s reliance on Russian oil and gas.

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In its submission to the National Assembly committee studying the bill, privately-held Utica said Quebec was well positioned to replace about 20 per cent of Russian gas supplies to Europe and could ramp up production to one trillion cubic feet annually within two or three years.

“If one considers current natural gas prices, the operations would not only be profitable, but would enable the Quebec government to generate, during this transition, considerable royalties that could be reinvested in the vital government functions that are health care and education,” Utica said in its brief. “Natural gas production would also enable investment in regional communities, including Indigenous communities, that have already expressed support for resource development on their territories.”

With its massive hydroelectric generating stations, Quebec has a self-image of a green energy superpower, and the province’s environmental movement has successfully blocked proposed fossil fuel developments, such the $14-billion GNL Québec liquified natural gas project on the Saguenay River. Russia’s invasion of Ukraine, however, has resuscitated interest in GNL Québec, which would rely on natural gas from Western Canada to supply markets in Europe.

Despite the province’s abundant hydropower, more than half of Quebec’s energy comes from fossils fuels. In recent years, the province has not imported oil from outside North America. But Quebec drivers are nevertheless consuming more oil than ever, with sales of gas-guzzling SUVs and light trucks far outpacing those of more fuel-efficient passenger vehicles in recent years.

Opponents of the ban on oil and gas exploration argue that the government should focus more on reducing fossil fuel consumption in the province rather than turning its nose up at a potentially lucrative source of royalty revenue. They are threatening to sue, arguing that the $100-million compensation package for cancelling their exploration claims is inadequate given the potential value of their gas reserves.

They also point to a recent poll commissioned by the Montreal Economic Institute showing that a majority of Quebeckers would support exploiting natural gas development in the province to help Europe end its dependence on Russian gas.

Quebec Environment Minister Benoit Charette dismissed the poll as “biased,” given the current geopolitical context. Federal Conservative Party leadership candidates Jean Charest and Pierre Poilievre have both cited Russia’s invasion of Ukraine to justify their support for reviving GNL Québec.

“We made our decision last year and we have no intention of reconsidering it,” Mr. Charette said about the GNL project.

The CAQ is eager to avoid a public debate about GNL Québec and the fossil-fuel ban in advance of October’s provincial election. But the suddenly resurgent Quebec Conservative Party, whose leader Éric Duhaime supports GNL Québec and opposes the ban on oil and gas development, could interfere with those wishes.

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