An oil sands operations near Fort McMurray, Alberta. Oil sands are a production is a major source of carbon emissions. Credit...Todd Korol/Reuters

Ian Austen

By Ian Austen

Reporting from Ottawa

Nov. 4, 2024

Updated 6:01 p.m. ET

Canada announced regulations on Monday to cap carbon emissions from its oil and gas industry and reduce the release of greenhouse gases, a move bitterly opposed by the energy industry and met with lukewarm support from some environmentalists who say the rules are not strict enough.

Canadian officials said the country would cut emissions from its energy sector by 35 percent over 2019 levels by 2030. The regulations, which include financial incentives and credits, flesh out the government’s announcement last December that it intended to limit emissions.

“We’re asking the oil and gas sector to invest their record profits into pollution cutting projects,” Steven Guilbeault, Canada’s environment minister, told a news conference. “Every sector must do its part. Oil and gas companies are no exception.”

The United States is the largest importer of Canadian fossil fuels, with most coming from oil sands in Alberta, which require large amounts of energy for production.

Canada’s oil and gas industry is the country’s largest source of carbon emissions, accounting for about one-third of the overall total.

While some oil sands operations have reduced the amount of carbon emitted for each barrel they produce, overall production has increased, raising emissions from oil sands by 142 percent over the last 19 years.

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An environmental protest march in September in Ottawa.Credit...Spencer Colby/The Canadian Press, via Associated Press

The Canadian government imposed taxes on carbon that helped reduce emissions in many sectors of the economy from 1990 to 2022. Still, Canada’s overall greenhouse emissions rose by 16.5 percent during that period, largely because the oil and gas industry raised their production levels.

“It is a significant moment for Canada,” Julia Levin, the associate director for climate at Environmental Defence, an environmental group, said before the announcement. “But there are troublesome loopholes.” These include allowing companies that fail to make cuts to buy offsets, she said.

Climate change has been a key issue for Prime Minister Justin Trudeau’s government, but the emissions cap and its regulations underscore the politically difficult balancing act Mr. Trudeau faces.

While many environmental groups and climate scientists say fossil fuel needs to be phased out in favor of green energy, Mr. Trudeau has long insisted that Canada needs a strong oil industry to finance the transition away from fossil fuels.

That commitment extended to the government buying an oil pipeline from its American owner and paying for its expansion.

The government says the cap, which will take effect in 2030, is not an effort to curbing oil and gas production, but only to reduce carbon emissions.

Alberta, which relies on energy royalties for its budget, has launched an advertising campaign opposing the cap, which it says will hobble the industry and cut job.

Danielle Smith, the province’s premier, said that meeting emissions cap would cause the province’s energy industry to cut production by one million barrels a day by 2030. Last year, the province produced 4.3 million barrels a day.

“This is not a responsible policy,” Ms. Smith said at a news conference.

Mr. Guilbeault said that Ms. Smith and her allies were ignoring the economic and environmental effects of climate change.

“They will continue doing stupid things and we will continue focusing on helping Canadians to create a robust economy, good jobs and working to protect the environment,” he said.

An alliance of the largest oil sands companies has proposed installing equipment to capture carbon dioxide and then send it through pipelines to store it in underground reservoirs, a process known as carbon capture and storage.

The federal government said it would offer energy companies tens of billions of dollars in tax credits to subsidize those systems, though there is still skepticism about the technical and financial viability of large-scale carbon capture.

Kendall Dilling, the president of the alliance, called the emissions cap a “misguided proposal that will drive cuts in oil and gas production and have a significant, negative impact on Canada’s economy.”

An oil sands plant, north of Fort McMurray, Alberta. Alberta is a major center of Canada’s energy sector. Credit...Ian Willms for The New York Times

Under the regulations released on Monday, energy companies that reduce their emissions will be given credits by the government. They will then be able to sell them to other oil and gas firms that have not met required emissions targets. Companies that have not met emissions targets will also have the option to pay into a fund to support carbon reduction programs.

Ms. Levin, the environmentalist, said the cap should be put in place before 2030 because more urgent action was needed to address the impact of greenhouse gases.

Caroline Brouillette, the executive director of Climate Action Network Canada, said that “leaving compliance until 2030 is like waiting until the second period of a hockey game to start keeping score.”

She also noted that the governments carbon emission reduction level for the energy sector falls short of Canada’s overall goal for lowering emissions. Canada has said it would reduce carbon emissions as a whole by 40 to 45 percent by 2030 from 2010 levels.

She also noted that the new measures will do nothing to limit the carbon emissions created when Canadian oil and gas exported to the United States is actually burned. The United States buys about 80 percent of Canada’s production.

“Sticking our heads in the sand means we’ll be unprepared when demand for Canada’s oil, some of the dirtiest and most expensive in the world, collapses,” Ms. Levin said.

The regulations released on Monday are drafts and are not scheduled to go into effect until the spring of next year.

But it is unclear if Mr. Trudeau’s government will still be in power. His Liberal Party does not control a majority of votes in the House of Commons and it trails the Conservatives, whose power base is in Alberta, by double digits in polls.

A national election must be held by next October although the government could be fall before the regulations come into effect.

Prime Minister Justin Trudeau has made addressing Canada’s contribution to climate change a major part of his agenda. Credit...Blair Gable/Reuters

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