441-02256 (Environment)

The oil and gas sector is a major contributor to Canada's economy. It is also Canada's largest source of greenhouse gas (GHG) emissions and, as such, has a critical role to play in meeting the country's climate objectives.

As indicated in the 2030 Emission Reduction Plan, published in March 2022, a key element of the Government of Canada’s climate plan is to cap and cut GHG emissions from the oil and gas sector at a pace and scale necessary to contribute to Canada’s 2030 climate goals and achieve net-zero emissions by 2050.

On December 7, 2023, the Government of Canada published a Regulatory Framework for an Oil and Gas Sector Greenhouse Gas Emissions Cap to outline key design details of the proposed approach to setting a cap on emissions and seek public comment. The framework proposes a cap-and-trade system (under the Canadian Environmental Protection Act) that sets a regulated limit on emissions from the sector. The regulatory framework takes into consideration information gathered and feedback received in response to the July 2022 discussion paper and engagement with provinces, territories, industry, Indigenous organizations, non-governmental organizations and other stakeholders.

The Government of Canada plans to publish proposed regulations in Part I of the Canada Gazette for a 60-day public comment period later this year. Formal written comments will also be sought on the proposal at that time. Publication of the final regulations is targeted for 2025, with the first reporting obligations starting as early as 2026 and full system requirements phased in between 2026 and 2030.

The emissions cap will build upon other significant actions the Government is taking to reduce GHG emissions from the oil and gas sector, including:

• Canada’s Methane Strategy, which includes new requirements for the oil and gas sector to achieve methane reductions of at least 75% by 2030 from 2012 levels.
• Carbon pollution pricing, which covers approximately 80% of GHG emissions in Canada, including from oil and gas. Currently, the minimum carbon pollution price is $80/tonne of GHG emissions, rising $15 per year to $170 in 2030.
• Clean Fuels Regulations, finalized in 2022, will reduce emissions from liquid fossil fuels across the lifecycle—from extraction, through processing, distribution and end-use and incent low-carbon fuels and technologies.