Canada proposes system to cut oil and gas emissions

Canada

OTTAWA, December 8, 2023 – The Canadian government has proposed a system to cut emissions from its oil and gas sector by between 35% and 38% by 2030, Reuters reported on Thursday.

The cap-and-trade system would start in 2026 and increase requirements by all oil and gas companies working in the country.

Under the new legislation, companies would be able to emit between 20% and 23% below 2019 levels alongside the purchase of carbon offsets or paying into a fund to promote decarbonisation of the sector.

Oil and gas players will be able to sell unused allowances to other companies.

The new system is expected to be drafted by mid-2024 and enacted in 2026.

The nation has promised to cut greenhouse gas emissions by between 40% and 45% from 2005 levels by 2030.

The local hydrocarbons industry is the nation’s largest contributor, accounting for more than 25% of the country’s emissions.

Canada is the world’s fourth largest oil producer.

The EU installed the first cap-and-trade instrument in 2005 called the emissions trading system, with record carbon prices hitting around USD 107 per tonne in 2023.