Ottawa Imposes Regulations Mandating Oil and Gas Companies to Reduce Emissions by 33%

Oil and gas companies will need to decrease emissions by one-third by 2032 under new regulations announced on Nov. 4 by Environment Minister Steven Guilbeault.

The draft regulations require upstream oil and gas operations to reduce their greenhouse gas emissions by 35 percent below 2019 levels between 2030 and 2032.

The regulations will be released on Nov. 9 for consultation until Jan. 8, 2025, with the final regulations expected to be published in spring 2025. The regulations are set to take effect in 2026.

Guilbeault mentioned that the regulations would establish a cap-and-trade system that rewards facilities with low pollution levels and encourages high-polluting facilities to adopt green technologies.
Ottawa initially introduced the cap and trade
framework in December 2023, offering companies a limited number of emissions credits that decrease over time until the sector achieves net-zero emissions.

Companies in the sector that reduce emissions faster can purchase a limited number of carbon offset credits or contribute to a decarbonization fund, reducing the emissions requirement from 35 percent to between 20 and 23 percent.

Guilbeault clarified, “This plan was carefully crafted through thorough consultations. It targets pollution, not production.”

The federal Conservative Party criticized the proposed emissions cap on Nov. 4, stating it would impact Canadian energy workers and have negative economic consequences.

Meanwhile, Natural Resources Minister Jonathan Wilkinson mentioned that the government’s plan would support the 400,000 Canadian oil and gas workers, creating opportunities for skilled workers in decarbonization technologies and acknowledging the sector’s expected growth.