The Canadian government, led by Prime Minister Justin Trudeau, has mandated the fossil fuel industry to reduce emissions by 35-38% below 2019 levels by the year 2030. The policy was announced at the COP28 UN climate conference in Dubai.

The move aligns closely with Trudeau’s 2021 election campaign promises.

Canada’s environment minister Steven Guilbeault delivered the statement at COP28, pointing out the government’s dedication to ensuring that every sector contributes to the fight against climate change. The comprehensive policy includes oil and gas companies in a broader call for emission reduction across all sectors of the economy, marking a significant step in Canada’s strategy to achieve net-zero emissions by 2050.

Under the new framework, emission limits will be set. The companies falling short will be required to buy and trade emission allowances with others. The system allows facilities to purchase a restricted amount of carbon offset credits or contribute to a decarbonisation fund. However, the effectiveness of carbon offset credits has been questioned in terms of cutting planet-heating emissions.

The cap-and-trade system covers all greenhouse gas emissions and applies to oil and gas companies, offshore facilities, and liquefied natural gas producers, which collectively contribute about 85% of the sector’s emissions.

Notably, the announcement has not been met with unanimous support. Alberta, Canada’s main fossil-fuel producing province, has voiced strong opposition to the proposed emissions cap. Premier Danielle Smith vehemently opposes what she perceives as arbitrary restrictions on oil and gas, including methane emissions. Smith plans to challenge the policy, aiming to create a “constitutional shield” against the proposed cap. Her argument is that it undermines the unity of the country.

Criticism also comes from environmental advocates such as Keith Stewart from Greenpeace Canada. Stewart argues that the announced framework falls short of the ambitious emissions cap needed for a rapid and fair phase-out of fossil fuels to effectively address climate change.

Looking ahead, the Canadian government plans to publish draft regulations in mid-2024, seeking input from the industry.