Canada will release plans for oil and gas emissions caps this fall

Prime Minister Justin Trudeau’s government plans to unveil proposals this fall to limit oil and gas emissions, a policy that will test Canada’s ability to meet climate targets without crippling a key economic sector.

The draft regulations will be published as soon as October and “definitely” ahead of the UN climate conference in Dubai, which starts on November 30, Environment Minister Steven Gilbilt said in an interview.

Emissions caps are the first promised in Trudeau’s 2021 election platform, to ensure Canada is on track with its climate commitments. But controlling energy-field emissions is sure to be a fight with the conservative provincial government of Alberta, where most of Canada’s oil is produced.

Industry response to the cap will depend on the details of Guilbeault’s proposal. He initially aimed to release draft regulations in the spring, but those have been delayed as the government struggles to balance cutting emissions without cutting production.

Last year, the environment minister published an emissions reduction plan that predicted a 42% reduction in oil and gas emissions by 2030 – a target that oil industry groups argued was too restrictive. However, Canadian officials also said the 42% figure was a modeling exercise, and that each sector’s share of emissions reductions by 2030 could be different in reality.

Guilbeault said the government has had productive conversations with energy companies and he believes they will find a mutually acceptable plan.

“It’s no secret, generally speaking, that the industry doesn’t particularly like the government coming up with new regulations,” Guilbeault said, speaking by phone from China, where he is attending environmental talks. “But I think and by and large, the industry understands that we have to deal with emissions, the world is de-carbonizing whether they like it or not, and they can either be part of the solution or the solution will be imposed on them.”

The Trudeau government is betting big on carbon capture and storage to meet its climate goals, pledging C$12.4 billion ($9.2 billion) in tax credits for the technology through the middle of the next decade.

Suncor Energy Inc. Emissions cap regulations have been eased as some fossil-fuel companies refocus on their core oil businesses and reduce their emphasis on long-term renewable projects.

Guilbault said strong opposition came from some provinces, though he declined to name them. A statement from Alberta Premier Daniel Smith this week left little doubt about his government’s position, as he called for an “emissions cap that would effectively force energy companies to limit their oil and gas production.”

“We would strongly advise the federal government to refrain from testing the resolve of our government or Albertans on this issue,” Smith said.

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