Three long years after the Prime Minister promised to cap oil and gas climate pollution “today,” the federal government has published its draft Oil and Gas Sector Greenhouse Gas Emissions Cap Regulations. These regulations will be critical for helping ensure Canada meets its climate targets, but only if they are strengthened and passed as soon as possible.  

The government is accepting public comments until January 8th – have your say on how to strengthen the regulations by submitting a letter below. 

Why are oil and gas pollution cap regulations important?

As we’ve written before, the oil and gas industry has the highest greenhouse gas emissions of any sector in Canada. Despite promises to voluntarily reduce climate pollution, the industry’s emissions are steadily rising and provinces like Alberta – which has the highest emissions in the country – are not doing enough to tackle the problem. Unless we get a grip on runaway oil and gas emissions, we stand no chance of meeting our climate targets.  

What needs to be done to strengthen oil and gas emissions cap regulations?

The draft regulations will establish a cap-and-trade system for the oil and gas sector’s operational greenhouse gas emissions. For a short primer on how cap-and-trade works, check out this video.

Operators covered by the regulations will need to report all their emissions starting in 2026. In 2030, the cap will take effect, meaning that operators will only be able to emit as many greenhouse gases as they have credits for. Companies can trade emissions credits among themselves (for example, a company that will be over its limit can buy credits allowing it to emit more from a company that has successfully reduced its emissions).  

Generally, cap-and-trade is considered to be effective because it puts a hard limit on pollution while giving companies flexibility to choose how to comply. In this case, however, weaknesses in the regulations may limit their success. For instance:

• The cap level is too weak – only approximately 25% below 2005 levels, compared to Canada’s target of reducing emissions by 40-45%.  
• The regulations include “compliance flexibilities” – loopholes that would allow the cap to be exceeded by up to 20%.  
• The regulations do not make operators pay for their pollution – instead, emissions credits will be granted for free, contrary to the “polluter pays” principle. Making companies pay for their credits could raise funds that can be invested in protecting us from climate change.
• The cap doesn’t kick in until 2030 – nine years after the government pledged to cap the industry’s emissions “today.” The apparent reason for this delay relates to the plan to give out credits to the industry for free, a design problem that could be solved by auctioning off credits.  

Despite these gifts to industry, the sector, along with provinces like Alberta, are pushing back hard against the regulations. Join us in calling for the swift strengthening and passing of these much-needed oil and gas climate pollution regulations!  

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