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Ottawa set to announce cap-and-trade framework to reduce emissions in oil and gas sector

A cap-and-trade system would allow companies to buy and trade a limited number of emissions allowances or permits. The number of those permits could decline over time to reflect the emissions cap. (Kyle Bakx/CBC - image credit)
A cap-and-trade system would allow companies to buy and trade a limited number of emissions allowances or permits. The number of those permits could decline over time to reflect the emissions cap. (Kyle Bakx/CBC - image credit)

The federal government will unveil its oil and gas emissions cap framework on Thursday, a senior government official told CBC News.

The framework will be implemented through a cap-and-trade system, the official said.

Environment Minister Steven Guilbeault and Natural Resources Minister Jonathan Wilkinson will jointly announce the cap plan. The news was first reported by the Globe and Mail.

A cap-and-trade system would allow companies to buy and trade a limited number of emissions allowances or permits. The number of those permits could decline over time to reflect the emissions cap. The other option Ottawa was contemplating was an enhanced carbon price for the oil and gas sector.

The government official didn't say where the cap will be set in megatonnes. The official said the new plan will establish a range, rather than a single cap.

The plan will include a number of compliance options, including the purchase of carbon credits and participation in a decarbonization fund.

Speaking to reporters ahead of Wednesday's question period, Wilkinson said the system won't be implemented right away and the government will give industry time to adjust.

Minister of Energy and Natural Resources Jonathan Wilkinson speaks to reporters during the Liberal Cabinet retreat in Charlottetown, P.E.I. on Tuesday, August 22, 2023.
Minister of Energy and Natural Resources Jonathan Wilkinson speaks to reporters during the Liberal Cabinet retreat in Charlottetown, P.E.I. on Tuesday, August 22, 2023.

Minister of Energy and Natural Resources Jonathan Wilkinson says the emissions cap plan will give industry time to adapt. (Darren Calabrese/The Canadian Press)

"There will be some time for adoption but there will be a significant reduction in greenhouse gas emissions from the oil and gas sector by 2030," he said. He didn't offer any further details about the plan.

Guilbeault is currently in Dubai at the 2023 United Nations Climate Change Conference, better known as COP28.

The federal government has vowed to cut carbon emissions by at least 40 per cent below 2005 levels by 2030. The federal environment commissioner said last month that Ottawa is not on track to meet that target.

Alberta premier says feds asked her to sign NDA

Alberta Premier Danielle Smith, meanwhile, says the federal government asked her and her team to sign a non-disclosure agreement before examining a preview copy of Ottawa's plan.

"They asked us if we'd be prepared to sign a non-disclosure agreement and then tell us what they're going to impose on us," Smith said in an interview airing Wednesday on CBC News Network's Power Politics.

"Does that sound like cooperative federalism to you? Because it sure doesn't sound like it to me," she told host David Cochrane.

Alberta Premier Danielle Smith explains how she intends her first usage of the province's Sovereignty Act to push against federal clean energy regulations.
Alberta Premier Danielle Smith explains how she intends her first usage of the province's Sovereignty Act to push against federal clean energy regulations.

Alberta Premier Danielle Smith has said she'll oppose Ottawa's pending regulations to cap oil and gas emissions. (Jason Franson/The Canadian Press)

A federal government official told CBC News it's normal government practice to ask stakeholders to sign non-disclosure agreements before allowing them to examine anything as significant as the emissions cap plan.

Smith — who is also in Dubai for COP28 — told CBC News she didn't sign the agreement. Asked why she thought she was asked to sign the agreement, she said Ottawa "doesn't respect our jurisdiction."

"This is something that is so important, has such a major impact on the development of our resources, that they should be working collaboratively with us," she said.

Smith has said in the past her government plans to oppose Ottawa's pending regulations.