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Government of Canada outlines next steps to develop an oil and gas emissions cap


Tuesday, 19 July 2022 16:34.PM

In the 2030 Emissions Reduction Plan, the Government of Canada committed to fighting climate change while creating jobs and building a strong economy for generations to come. Today, the Minister of Environment and Climate Change, the Honourable Steven Guilbeault, and the Minister of Natural Resources, the Honourable Jonathan Wilkinson, opened consultations on a key commitment in that plan: capping and cutting emissions from the oil and gas sector.

The oil and gas sector is Canada's largest and fastest growing source of emissions. To remain competitive in a tighter future market, Canadian production will have to reduce its carbon intensity while the sector also explores opportunities to transition to non-emitting products and services. Reducing oil and gas emissions is key to achieving Canada's emission targets and driving meaningful climate action. It also will create sustainable, long-term economic growth and provide affordable, clean energy.

The discussion paper released today to launch consultations outlines two options to establish the cap.

• A cap-and-trade system under the Canadian Environmental Protection Act that sets regulated limits on emissions from the sector; and
• Modifying the carbon pricing benchmark requirements for heavy emitters to create price-driven incentives to reduce emissions to levels corresponding to the cap.

Core to either approach is the goal of lowering emissions at a pace and scale needed to achieve net-zero emissions by 2050 and make a meaningful contribution toward Canada's 2030 emission reduction target. Also core to either approach is supporting investments in clean technologies to decarbonize the sector and create good, sustainable jobs.

The Government of Canada expects to outline the design of the oil and gas emissions cap early next year, ahead of the next steps to implement the cap.

The Government of Canada will work closely with provinces and territories, Indigenous groups, the oil and gas sector, and other stakeholders to provide certainty for industry and Canadians, while remaining attuned to evolving energy security considerations, and maximizing opportunities for ongoing investment in the sector. With record profits in the oil and gas sector, now is the time to work collaboratively on the path forward to ensure clean air, long-term economic success, and good jobs that will serve Canadians for generations to come.

"Establishing a cap on oil and gas emissions is one of the key commitments of our Government's Emissions Reduction Plan. Canada's oil and gas companies have proven repeatedly that they can innovate and develop new technologies and more competitive business models. True global energy security and affordability can only come with reduced emissions. With this cap, we will work with industry, provinces, Indigenous groups, civil society, and others to take action on drawing down the emissions from oil and gas production."
– The Honourable Steven Guilbeault, Minister of Environment and Climate Change

Quick facts

• In 2020, the oil and gas sector produced 27 percent of Canada's greenhouse gas emissions.
• Canada's oil and gas sector faces a major transformation as the world moves away from fossil fuels to address climate change and to enhance energy security.
• The design of the cap will also take into account other regulations, such as the commitment to reduce oil and gas methane emissions by at least 75 percent by 2030, as well as complementary climate policies by federal and provincial governments.
• The design of the cap is also being informed by the Parliamentary Standing Committee on Natural Resources study of the Greenhouse Gas Emissions Cap for the Oil and Gas Sector. Since early February, the Committee has engaged with individuals and organizations to examine how an emissions cap could be designed and implemented, as well as various related issues.
• The 2030 Emissions Reduction Plan is an evergreen plan that will evolve as Canada moves toward its 2030 and 2050 targets. The Canadian Net-Zero Accountability Act ensures that the Government will continue to be transparent and accountable to Canadians as it implements the plan. In accordance with the legislation, there will be three progress reports in 2023, 2025, and 2027 that include more details on the measures and strategies that are under development to lower emissions from the oil and gas sector.

SOURCE: Environment and Climate Change Canada