Canada Plans To Cap Emissions From Oil And Gas Sector

Canada’s federal government proposed on Monday steps to develop an emissions cap for the oil and gas sector, the largest contributor to the country’s greenhouse gas emissions.

The plan drew criticism from the government of the key oil and gas-producing province, Alberta, which said it would not accept a plan from the federal government interfering with its ability to develop energy resources.

In a discussion document published this week, Canada seeks input by September 30, 2022, on two proposed ways to cap emissions from the oil and gas industry. One option is to introduce a cap-and-trade system under the Canadian Environmental Protection Act that sets regulated limits on emissions from the sector. The other is to modify the carbon pricing benchmark requirements for heavy emitters to create price-driven incentives to reduce emissions to levels corresponding to the cap.

The oil and gas sector is Canada’s largest source of greenhouse gas emissions, accounting for around 27 percent of total national emissions in 2020, the Canadian government said.

“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,” said Steven Guilbeault, Canada’s Minister of Environment and Climate Change.

But Alberta said, via Minister of Environment and Parks, Whitney Issik, and Minister of Energy Sonya Savage, that it “will not accept any plan from the federal government that seeks to interfere in our constitutionally protected ability to develop our resources. Provinces are the owners of these natural resources, which have been responsibly managed on behalf of Canadians for decades.”

“Alberta is fully prepared to engage in meaningful and productive discussions with the federal government on ways we can reduce emissions – yet we have not been given that chance,” the ministers said.

Alberta already has a limit on oil sands emissions, and the Pathways Alliance is targeting net zero by 2050. In addition, methane has been reduced from the upstream oil and gas sector by nearly 35 percent since 2014, and Alberta has the fastest-growing renewable energy sector in Canada, the Alberta government says.

By Tsvetana Paraskova for Oilprice.com

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