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Federal Liberals Unveil Oil and Gas Emissions Cap, Adjust Expectations to Balance Production Concerns

The federal Liberals are set to unveil the details of their long-promised oil and gas emissions cap on Thursday. This policy plays a crucial role in Canada’s overarching plan for reducing emissions over the long term. However, the framework to be presented on Thursday indicates that the sector will not be required to make emissions cuts as substantial as initially envisioned.

In the 2022 emissions reduction plan, there was an expectation that emissions from the oil and gas sector would decrease by over 40% from current levels by 2030. The industry strongly objected to this demand, arguing that achieving such a significant reduction in just seven years would be impractical without also reducing production.

In response to industry concerns, the government opted for a compromise, revising its expectations to ensure that the emissions cap remains feasible without adversely impacting production. It’s worth noting that the Supreme Court of Canada has affirmed Ottawa’s authority to regulate greenhouse gas emissions. However, the jurisdiction over natural resources, including oil and gas production, is exclusively provincial. Consequently, any policy mandating production cuts could expose Ottawa to further legal challenges from the provinces.

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