Federal Government Amends Emissions Regulations

Photo Credit: Government of Canada

On Nov. 4, the Canadian government published new draft regulations that reduce the legal amount of greenhouse gas emissions that oil and gas companies can produce. 

The oil and gas industry produces 31 per cent of Canada’s total emissions, and in 2022, it was responsible for 256 million tonnes of carbon dioxide emissions, according to Toronto City News. Within the next eight years, the proposed regulations would require that emissions from the oil and gas sector are reduced to one-third below 2019 levels.  

All producers will receive an allowance of the carbon pollution that they’re allowed to create. Companies that don’t use their entire allowance will receive credits, which can be sold for profit. Alternatively, producers can purchase offset credits from decarbonization projects to fulfill up to 10 per cent of their emissions cap — which the government hopes will allow companies to maintain production while cutting emissions. 

According to The Canadian Press, Environmental Defence — a leading Canadian environmental advocacy organization — applauded the changes, but advised the government to get rid of “loopholes” in its plans, such as the proposed offset credits. They also took issue with the expected implementation being in 2026. 

However, federal Environment Minister Steven Guilbeault credits the policy’s pragmatist design. “It’s an economic strategy as much as it is an environmental strategy,” he told Canada’s National Observer. In a press conference, he praised his government for developing “what is technically feasible for the sector, to keep industry accountable to their own promise to be carbon neutral by 2050.”

Still, multiple provinces and industry groups stand in opposition to the draft regulations. The Canadian Association of Petroleum Producers (CAPP) fears the changes will lower investments in oil and gas sectors. “The result would be lower production, lower exports, fewer jobs, lower GDP, and less revenues to governments to fund critical infrastructure and social programs on which Canadians rely,” said CAPP president Lisa Baiton in a statement.

The Conservatives also raised concerns regarding unemployment. "Trudeau plans to crush the energy sector, putting hundreds of thousands of jobs at risk at the worst possible time," the party said in a statement. 

Additionally, Alberta predicts that the regulations will result in a production cut of one million barrels per day, by 2030, according to Reuters.

At a Nov. 4 news conference, Alberta Premier Danielle Smith announced that she was “pissed” and “absolutely angry” with the emissions cap. She plans to challenge the regulations in court, on the basis of a violation of Section 92A of Canada’s constitution, which allows provinces to maintain control over production of non-renewable resources. Smith says that she will “get [her] justice minister working on it immediately and we’ll start drafting a motion under the sovereignty act.”

According to Global News, The Montreal Economic Institute, an impartial, non-profit research organization, predicts that the amendments would cut 112,900 jobs by 2040. 

However, as per Reuters, Ottawa says that by 2030–2032, oil and gas production is predicted to grow 16 per cent from 2019 levels, despite the cap. 

Formal consultations on the draft will extend until Jan. 9, with complete amendments by 2025.