As regulations for the federal government’s oil and gas emissions cap approach the finish line, Canada’s environment minister warns the NDP and the Bloc Québécois that triggering an early election could dash hopes of curbing emissions from Canada’s biggest polluters.
Environment and Climate Change Minister Steven Guilbeault is highlighting what’s at risk as the government announces draft regulations on Monday to implement its emissions cap, which has been rebranded as the “oil and gas pollution cap.”
The Liberal government is not expected to implement the final regulations until the late spring of 2025, and an election is not due until later next year. However, all three opposition parties have enough votes to send Canadians to the polls early.
The New Democrats have been less clear about when they would topple the government, but they’ve suggested it won’t be soon. The Bloc Québécois has said it is working to push for an early election along with the Conservatives, who have called the proposed cap “another attack” on Canada’s oilpatch.
In an interview with CBC News before Monday’s announcement, Guilbeault urged the NDP and the Bloc to consider what’s at stake.
“If they decide to support the Conservative Party of Canada into sending us into an election sooner than the date of October 2025, then they will have to explain to Canadians … why they prevented us from putting in place one of the most important pieces of regulation to ensure that the oil and gas sector does its fair share when it comes to fighting pollution in Canada,” Guilbeault said.
The oil and gas sector is Canada’s biggest greenhouse gas emitter, accounting for about a third of the country’s emissions.
In a news release on Monday, the government notes that oil and gas companies have seen a “tenfold” increase in profits — from $6.6 billion to $66.6 billion in 2022. It adds that companies aren’t spending enough money to reduce their carbon footprint.
“Profits have still remained strong with consecutive record years, and capital expenditures have been targeting new production rather than decarbonization,” the news release states. “The draft regulation will encourage the sector to redirect these record profits into decarbonization.”
Monday’s announcement — which follows the release last December of a regulatory framework for limiting emissions to allow time for input — reaffirms that Ottawa will enforce a hard cap on oil and gas emissions through a cap-and-trade system. Such a system would allocate a limited number of emissions permits, which, over time, would decline until the sector achieves net-zero emissions.
Oil and gas facilities that cut their emissions faster can sell their excess permits through a trading system to other companies. According to the proposed regulations, the sector will need to reduce its emissions in 2030 by 35 per cent below 2019 levels before eventually reaching net zero by 2050.
The federal government has revealed how it will set an upper limit on greenhouse gas emissions through a cap-and-trade system for the country’s biggest emitter, the oil and gas industry.
The cap would apply to upstream emissions from oil and gas development in Canada. The regulations would affect natural gas producers, conventional and offshore oil producers, the oilsands, LNG facilities and natural gas processors. Refinery emissions are exempt because they fall under clean fuel regulations.
The government said in the news release that the approach puts “a limit on pollution, not production,” building in some flexibility to achieve emissions cuts by purchasing emission offset credits or contributing to funds to help pay for further emissions reductions.
A pollution or production cap?
The industry and others have vocally opposed the measure. The Pathways Alliance, a consortium of Canada’s largest oilsands companies, previously said that existing climate policy measures are “incenting the right behaviours” and called the proposed emissions cap “unnecessary.”
“The proposed emissions cap will likely have the unintended effect of making oil and gas operators involuntarily choose to shut in Canadian production rather than decarbonize it for global and domestic markets,” the alliance said.
But Guilbeault said the industry is exaggerating its concerns.
“I can’t think of a piece of regulation that has been published, whether during my tenure as environment minister or in my 30 years working in the sector, where industry did not say, ‘Oh my God, this is the end of the world as we know it,'” he told CBC News.
The draft regulations arrive as the Alberta government introduced a $7-million advertising blitz against the proposal. Branded “scrap the cap,” it launched television, online video, print and social media ads. A truck with an electronic billboard for the campaign has regularly circled the streets around Parliament Hill.
“We’re telling the federal government to forget this reckless and extreme idea and get behind Alberta’s leadership by investing in real solutions that cut emissions and do not cut Canada’s prosperity,” Premier Danielle Smith said in October.
The Alberta government has said the pending cap would result in a significant production cut, echoing what some in the oilpatch have said. The province also released its economic impact report, which showed the negative effect of the emissions cap on GDP.
Guilbeault said Ottawa would be willing to negotiate an equivalency agreement with the province if it wanted to develop its made-in-Alberta regulation to drive down emissions from the oil and gas sector on the path to net-zero by 2050.
“Yes, if Alberta or any of the other provinces wanted to do their own system that would be equivalent to the federal system, they would have the ability to do it,” he said.
British Columbia has already committed to implementing its own provincial oil and gas emissions cap backstop, but that’s if a future federal government does not move ahead with a national cap-and-trade system for oil and gas emissions.