Canada to unveil long-awaited plan for emissions cap on oil and gas sector

Canada's Prime Minister Justin Trudeau makes a speech, in Vancouver

By David Ljunggren

OTTAWA (Reuters) -Canada will on Monday unveil the details of its long-awaited plan to cap emissions of greenhouse gases from the oil and gas sector, an idea that the energy industry and some provinces strongly oppose.

A government announcement issued on Sunday said the draft plan would be released at 1 p.m. (1800 GMT) on Monday. Ottawa said last December the plan would be unveiled by the end of 2024.

The Liberal government wants the energy industry - Canada's highest-polluting sector - to cut emissions to 137 million metric tons, 37% below 2022 levels, by 2030.

The proposals will bring in a cap-and-trade system that recognizes better-performing companies and gives higher-polluting firms an incentive to invest in pollution-cutting projects, said Hermine Landry, a spokeswoman for Environment Minister Steven Guilbeault.

"The Canadian oil and gas sector is one of the only sectors where pollution levels continue to rise, with more than double the greenhouse gas pollution than all other industries combined," she said in a statement.

Canada, the world's fourth-largest oil producer, is aiming to cut emissions 40% to 45% below 2005 levels by 2030. The energy sector accounts for more than a quarter of all emissions.

"The regulations would cap pollution, not production," Landry said in a statement.

The oil-producing province of Alberta says the proposals are in effect a production cap that will drive up prices, and cost up to 150,000 jobs and cut GDP by up to C$1 trillion ($720 billion).

The Canadian Association of Petroleum Producers says the proposals mean Canada would be the only oil and natural gas-producing country on earth that caps emissions.

Neither the Alberta government nor the association was immediately available for comment.

Whether the cap will come into effect, and in what form, is unclear. The next election has to be held by late October 2025 and polls show the Liberals will lose to the Conservatives, who have close ties to the energy industry and are promising to scrap a separate federal carbon tax imposed on consumers.

Conservative spokespeople were not immediately available to comment on the party's position regarding the emissions cap.

Keith Stewart of the environmental group Greenpeace said oil companies had not been spending enough on cutting pollution.

"The only way that changes if they face a hard cap that forces them to invest in cleaning up, so it is vital the federal government gets this done and done right," he said via email.

The cap will prompt companies to cut production rather than invest in costly carbon capture and storage technology, consultancy Deloitte said in June.

(Reporting by David Ljunggren in OttawaEditing by Chris Reese and Matthew Lewis)