Federal Draft Rules Require Oil and Gas Sector to Cut Emissions 35% Below 2019 Levels

The federal government announced draft regulations mandating a 35% reduction in emissions for Canada’s oil and gas sector, capping emissions without limiting production. Companies have four years to phase in this cut, with flexibility to achieve reductions via offsets or contributions to a decarbonization fund. The cap aligns with a cap-and-trade approach, allowing facilities that cut emissions faster to trade credits with others.

Premier Danielle Smith of Alberta, among others, expressed strong opposition, citing risks to the economy and job loss, while federal officials argue the cap encourages the sector to reinvest profits into reducing emissions. The draft rules now open for public consultation, with final regulations expected in 2025.