Canada’s fossil fuel firms will need to cut emissions by at least 35% by 2030

Aliya Uteuova and agencies
Thu, December 7, 2023 

Photograph: Bloomberg/Getty Images


Canada will require its fossil fuel industry to cut its emissions between 35% to 38% below 2019 levels starting in 2030, it was announced on Thursday.

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The prime minister Justin Trudeau’s government plans to limit emissions from the oil and gas sector through a national cap-and-trade system which he first proposed in his 2021 election campaign, according to the policy announcement.

“Every sector of Canada’s economy must do its part to combat climate change and build a safe, prosperous, and healthy future for Canadians,” said Canada’s environment minister, Steven Guilbeault, in a statement made from the Cop28 UN climate conference in Dubai. He added: “All sectors of our economy need to reduce their emissions and that includes oil and gas companies.”

The policy, part of Canada’s plan to reach net-zero by 2050, works by setting a limit on emissions, and having companies that do not meet that benchmark buy and trade emission allowances with other producers.

The newly introduced framework states that facilities would be able to buy a limited amount of carbon offset credits – which have faced questions over their effectiveness in cutting planet-heating emissions – or contribute to a decarbonization fund.

The cap would cover all greenhouse gas emissions and apply to oil and gas companies, offshore facilities and liquefied natural gas producers. Together they represent roughly 85% of the sector’s emissions, according to the policy release.

The proposal was met with opposition from the premier of Canada’s main fossil-fuel producing province Alberta.

“We have been very firm in saying that we oppose any kind of arbitrary emissions cap, whether it’s on oil and gas emissions or whether it’s on methane,” Alberta’s premier, Danielle Smith, said on Thursday. Smith relayed her intentions to challenge the policy and produce a “constitutional shield” against the proposal.

“This proposed cap also undermines the unity of our country,” Smith said in a statement.

In response to the Canada’s announcement of the capping framework, Keith Stewart, senior energy strategist for Greenpeace Canada said: “This isn’t yet the ambitious emissions cap we need to set us on a path to the full, fast and fair phase-out of fossil fuels necessary to avoid the worst impacts of climate change.”

The government promises to publish draft regulations in mid-2024 with input from the industry.

Reuters contributed to this story

Canada Orders Emissions Cuts Up to 38% for Oil and Gas Firms

Laura Dhillon Kane and Kevin Orland
Thu, December 7, 2023 



(Bloomberg) -- Canada will require its oil and gas industry to cut emissions to 35% to 38% below 2019 levels in six years in what the government is calling a historic first for a major fossil-fuel producing country.

Environment Minister Steven Guilbeault announced the long-promised oil and gas emissions cap Thursday at the COP28 summit in Dubai, a policy likely to inflame tensions with conservative leaders of western provinces that are home to the bulk of the industry.

Prime Minister Justin Trudeau’s government will implement a cap-and-trade system to achieve the cuts. It will set a legal limit on the sector’s emissions and then allow companies to buy and trade a limited number of emissions allowances or permits. Companies that reduce emissions will be able to sell more permits, thereby rewarding those who innovate to cut pollution.

“There is no future for this industry unless they decarbonize,” Guilbeault said in an interview.

Producers will be allowed the flexibility to emit up to a level of about 20% to 23% below 2019 levels through the ability to buy carbon offsets or pay into a fund that promotes decarbonization in the sector if their emissions exceed the cap.

The cap will go down over time until Canada’s economy reaches net zero in 2050. Thursday’s announcement is a framework that lays out the plan, with more details to be released in draft regulations in the middle of next year, Guilbeault said. Those regulations will narrow down an exact emissions target for 2030, he said.

Industry Reaction

The Canadian Association of Energy Contractors said it rejects the cap, arguing it will hurt Canadian energy workers and the small and medium-sized businesses supporting them.

“The world will continue its decarbonization journey, but will demand more pragmatic and affordable policies,” the association’s head, Mark Scholz, said Thursday in a statement. “The federal government’s emissions cap will hinder Canada’s ability to attract capital. It means higher energy costs and fewer jobs for Canadian energy workers.”

The Explorers and Producers Association of Canada said imposing an emissions cap on oil and gas producers, who are already achieving significant emissions reductions, is unnecessary and unacceptable.

Alberta Premier Danielle Smith is already pushing back, saying the “de facto production cap on Alberta’s oil and gas sector amounts to an intentional attack by the federal government on the economy of Alberta.” Smith has already invoked an act that she says allows the province to override federal legislation to defy its clean-electricity regulations.

The oil and gas sector is the largest single source of emissions for Canada, accounting for 28% of that pollution in 2021, according to Canada’s government. Emissions from the sector were 201 million metric tons in 2019, 20% higher than 2005.

The cap-and-trade system will cover all direct greenhouse gas emissions, while also accounting for indirect emissions related to the production of oil and gas and carbon storage. The cap will regulate upstream oil and gas facilities, including offshore operations, and will also apply to liquefied natural gas plants.

The environment minister said the regulations will ensure that oil and gas companies making record profits invest them in Canadian jobs, communities and the economy. There was no new government funding announced Thursday to help industry meet the targets, though Canada previously promised C$12.4 billion ($9.1 billion) in tax credits for building carbon capture systems.

Guilbeault said he had been speaking with other major fossil fuel-producing countries at COP28 and none had capped emissions from their sector. “It’s never been done before.


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