Canada Unveils Cap and Trade System for Oil and Gas Emissions

© Deyan / Adobe Stock
© Deyan / Adobe Stock

Canada on Thursday unveiled a plan to limit emissions from the oil and gas sector using a cap and trade system starting in 2026, a step toward fulfilling a government pledge to cut emissions in the country's most polluting sector.

Under the proposal, 2030 oil and gas sector emissions would be capped at 35% to 38% below 2019 levels, the environment ministry said in a statement.

Ottawa is planning to publish draft regulations by mid-2024, with final rules targeted a year later and enactment in 2026.

The sector produced 189 megatonnes of emissions in 2021, according to the federal government's national inventory report, more than a quarter of the country's total.

"(The) plan to cap and reduce emissions from Canada's largest emitting sector is ambitious, but practical," Environment Minister Steven Guilbeault said in the statement.

"It considers the global demand for oil and gas, and the importance of the sector in Canada's economy, and sets a limit that is strict, but achievable," Guilbeault said.

Prime Minister Justin Trudeau first proposed a cap on oil and gas emissions during his 2021 election campaign. The long-awaited policy has drawn strong opposition from Canada's main oil-producing province Alberta.

(Reuters - Reporting by Ismail Shakil, Steve Scherer and Nia Williams; Editing by David Ljunggren)

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