Canada launches consultations on oil and gas emissions cap

·2-min read

By Nia Williams

(Reuters) -Canada on Monday launched consultations on a plan to cap and cut greenhouse gases from the oil and gas sector, its largest and fastest-growing source of emissions, outlining two options to help achieve Prime Minister Justin Trudeau's climate promises.

But the proposal faced immediate backlash from Alberta, Canada's main oil-producing province, which said the federal government cannot act unilaterally to meet emissions targets.

"Alberta will not accept any plan from the federal government that seeks to interfere in our constitutionally protected ability to develop our resources," the provincial government said in a joint statement from its Energy and Environment ministers.

Canada's Liberal government is aiming to cut emissions 40% to 45% below 2005 levels by 2030, and targeting net-zero emissions by 2050. To achieve this, policymakers need to enforce a sharp reduction in pollution from the oil and gas sector, responsible for 27% of the country's emissions.

Canada is considering either a cap-and-trade system that sets regulated limits on emissions from the sector, or modifying - and potentially raising - the carbon price for heavy industrial emitters to create price incentives to drive down emissions, according to the discussion paper released on Monday.

The carbon price in Canada is currently set at C$50 a tonne and set to ramp up to C$170 a tonne by 2030.

"The emissions cap will be a critical test for the federal government - and a defining moment for the Prime Minister’s legacy on climate change," Julia Levin, national climate program manager at Environmental Defence, said in a statement.

Trudeau first promised the cap during his 2021 election campaign, but details on the policy have been scarce so far.

The oil and gas sector, provinces and other stakeholders have until the end of September to comment on the discussion paper, and the government expects to outline the design of the emissions cap early next year.

Natural Resources Minister Jonathan Wilkinson said the industry will need to drastically cut emissions to remain competitive as the world moves toward a lower-carbon future.

"The demand for oil and gas in a net-zero economy will be entirely focused on those jurisdictions which can produce oil and gas with increasingly lower and ultimately near-zero production emissions," Wilkinson said.

(Reporting by Nia Williams in British ColumbiaEditing by Marguerita Choy and Matthew Lewis)

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