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Canada on Wednesday said it plans to unveil a cap and trade system starting in 2026 for limiting emissions from the oil and gas sector, a step toward fulfilling one of Prime Minister Justin Trudeau's key climate policies.
The framework for the cap and trade system will be announced on Thursday, ahead of draft regulations being released next year.
Federal Natural Resources Minister Jonathan Wilkinson said the cap would start in 2026 to give oil and gas companies time to adjust and acquire the technology needed for decarbonizing their operations, as per Reuters reports.
"So 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," Wilkinson told reporters in Ottawa.
Oil and gas is Canada's highest-polluting industry and produced 189 megatonnes of emissions in 2021, according to the federal government's national inventory report, more than a quarter of the country's total.
Trudeau's Liberals have pledged to cut emissions 40-45% below 2005 levels by 2030. Projections from the federal government's Emissions Reduction Plan (ERP) show oil and gas emissions should drop to 110 megatonnes by the end of the decade to help Canada stay on track for that target.
"The cap is going to be set at what is known to be technically achievable without impacting production," a government source said.
The source did not say what level the emissions cap would start at but said it would not be the 110-megatonne number that was in the ERP.
Any oil and gas producers that exceed the cap will have the option, up to a certain point, of buying carbon credits to offset their emissions or paying into a decarbonization fund, the source added.
Trudeau first proposed a cap on oil and gas emissions during his 2021 election campaign. The long-awaited policy has drawn strong opposition from Canada's main oil-producing province Alberta.