The Canadian government has introduced a draft framework for a cap-and-trade system for its oil and gas sector aiming to cap greenhouse gas (GHG) emissions at up to 38% below 2019 levels, while providing compliance flexibilities to emit up to a level 20-23% below 2019 levels. To comply with the framework, facilities either must reduce their emissions or buy allowances from other facilities that have reduced their emissions. The Regulatory Framework for an Oil and Gas Sector Greenhouse Gas Emissions Cap is aligned with Canada’s goal to achieve net zero emissions by 2050. The oil and gas sector is responsible for 28% of Canada's emissions.
In July 2022, Canada opened consultations on a plan to develop an oil and gas emissions cap, with the aim to reduce GHG emissions from the hydrocarbon industry by 31% below 2005 levels in 2030 through the introduction of a cap-and-trade system or by modifying the pollution pricing benchmark requirements to create price-driven limits on emissions from the oil and gas industry.
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