Canada Proposes Regulations to Limit Oil and Gas Emissions

The Government of Canada has introduced draft regulations aimed at capping greenhouse gas emissions from the oil and gas sector. These regulations propose a cap-and-trade system targeting a 35% reduction in emissions from 2019 levels. The draft regulations are designed to incentivize companies to invest in cleaner production processes without limiting production growth.

The oil and gas sector, which supports approximately 400,000 jobs, is Canada's largest source of greenhouse gas emissions. The government claims that the regulations will help the sector remain competitive as global demand for low-emission fuels increases. The draft regulations are part of Canada's broader 2030 Emissions Reduction Plan, which aims to cut national emissions by 40-45% from 2005 levels.

Consultations with industry stakeholders, Indigenous groups, and provincial and territorial governments have informed the draft regulations. The government plans to continue consultations before finalizing the regulations, which are expected to be published in 2025.

Statistics Canada reports that the oil and gas sector's operating profits increased significantly from $6.6 billion in 2019 to $66.6 billion in 2022. The government encourages the sector to reinvest these profits into decarbonization efforts. The regulations are part of a suite of measures, including financial support for carbon capture and storage technologies, to reduce emissions and support workers.