On Monday, Canada is set to reveal its long-awaited plan to impose a cap on greenhouse gas emissions from the oil and gas sector—a measure that has stirred opposition from the energy industry and oil-producing provinces.
The Canadian government’s draft proposal, slated for release at 1 pm (1800 GMT), aims to reduce emissions without restricting oil production, according to Environment Minister Stephen Guilbeault’s spokesperson, Hermine Landry.
This emissions cap is part of a broader climate commitment from Prime Minister Justin Trudeau’s administration, which has consistently prioritized environmental initiatives. In December 2023, Canada set an ambitious target for oil and gas companies to cut emissions by as much as 38% below 2019 levels by 2030.
This goal, facilitated through a proposed cap-and-trade system, aligns with Canada’s overarching mission to lower national emissions by 40% to 45% below 2005 levels by the same year, Reuters.
“The regulations would cap pollution, not production,” said Landry, emphasizing that the policy is aimed at controlling the sector’s environmental impact rather than hindering energy output.
She further highlighted that Canada’s oil and gas industry continues to be the country’s largest source of emissions, producing more than a quarter of Canada’s total greenhouse gases and outpacing emissions from all other sectors combined. “The Canadian oil and gas sector is one of the only sectors where pollution levels continue to rise. Every sector needs to do its fair share,” she noted.
As the fourth-largest oil producer globally, Canada faces significant challenges in balancing its environmental goals with its oil sector’s economic significance. The new cap-and-trade plan is designed to allow companies to either reduce their emissions or purchase credits if they exceed the limit.
This approach, which has seen success in reducing emissions in other countries, aims to incentivize lower-emission practices without forcing immediate production cuts.
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Despite these assurances, Alberta and Saskatchewan—two of Canada’s largest oil-producing provinces—along with key industry groups, have expressed resistance to the cap. They argue that the cap could disrupt the sector’s economic stability and competitiveness.
Alberta Premier Danielle Smith and Saskatchewan Premier Scott Moe have both voiced strong opposition, questioning whether federal intervention is necessary and raising concerns that it could hinder jobs and growth in their provinces.
Industry stakeholders share these concerns, emphasizing that the cap may place undue pressure on companies still recovering from recent economic challenges. The Canadian Association of Petroleum Producers (CAPP) has argued that the industry is already making strides to cut emissions through technological advancements and that an additional cap might compromise competitiveness in the global market.
The pushback from provincial leaders and industry groups highlights the complex relationship between federal and provincial governments in Canada’s climate policy framework, Reuters.
Under Canada’s Constitution, provinces have jurisdiction over natural resources, which has previously led to clashes over policies perceived as federal overreach. The introduction of a cap on oil and gas emissions will likely spark further debate around balancing regional economic interests with national climate goals.
However, supporters of the cap argue that Canada’s oil and gas sector must evolve to align with the global shift toward cleaner energy. Environmental advocates have pointed to the sector’s high emissions profile, arguing that without significant measures, Canada will fall short of its 2030 targets and risk damaging its international reputation on climate leadership.
In addition to unveiling the draft proposal on Monday, the Trudeau administration will likely lay out the timeline for implementation and public consultation, a key step in securing input from both stakeholders and the general public. This rollout is part of a broader strategy to bring Canada closer to meeting its Paris Agreement commitments and positioning the country as a leader in the fight against climate change.
As Canada moves forward with its cap-and-trade approach, the upcoming months will be critical in determining how effectively the government can manage the competing priorities of environmental responsibility and economic vitality in one of its most influential industries.