Liberals defend oil and gas pollution cap as critics threaten legal action

Federal ministers defended their newly released oil and gas emissions cap on Monday, as critics called it part of an “ideological crusade.” 

The Liberals said capping oil and gas pollution is crucial to cut greenhouse gas emissions, while ensuring the industry’s competitiveness through the energy transition. However, Ottawa’s fiercest critics were quick to slam the proposal that aims to cut one-third of the sector’s emissions by 2030, setting up further rounds of conflict for Prime Minister Justin Trudeau’s beleaguered government. 

The Conservative Party, who have been campaigning hard against Liberal climate policies, were quick to attack the proposed regulations. In a statement, the Conservatives appeared to dismiss the notion climate change is a scientific reality that requires emissions reductions to solve, and instead said the Trudeau government's climate plans are “an ideological crusade against Canadian energy.”

“Justin Trudeau simply refuses to accept that Canada’s energy sector is the country’s single largest private sector investor in clean technologies,” the statement reads. “It has a clear record of reducing emissions and adhering to the highest standards of environmental protection.”

Given that Canada’s oil and gas emissions continue to rise, the inaccurate remarks that the industry has a “clear record” of emissions reductions were a response to Ottawa’s release of draft regulations to put a ceiling on oil and gas emissions. The plan involves using a cap and trade system, with an eye toward ratcheting the pollution down over time to meet the country’s climate targets, as climate scientists say is urgently required to avoid catastrophic climate change. 

“It’s an economic strategy as much as it is an environmental strategy,” Environment and Climate Change Minister Steven Guilbeault told Canada’s National Observer in an interview ahead of the announcement. 

The oil and gas sector’s profits have exploded from $6 billion to over $60 billion in recent years, Guilbeault said, adding “We want to make sure some of that money is invested in decarbonization in the sector to ensure jobs, and to ensure the sector has a future.”

The draft regulations propose capping oil and gas emissions beginning in 2030, and issuing allowances to companies to emit up to a certain level. If they emit more than they’re allowed, they would pay a penalty, pay into a federally managed decarbonization fund, or some other compliance option. If they emit less, they could sell those allowances to other companies who are above their threshold, thereby creating greater incentive to decarbonize. 

The draft regulations do not instruct oil and gas companies on how to cut their emissions, but federal ministers said they expect about half the reductions to come from forthcoming regulations to curb methane pollution 75 per cent by 2030. The remaining emissions, Ottawa expects, can be cleaned up using technology like carbon capture and storage. 

Given that the oil and gas sector represents Canada’s largest and fastest growing source of emissions, with the latest figures available revealing the sector is responsible for more than a third of the country’s total, “something had to be done” to address the pollution, Guilbeault said. But as the energy transition away from fossil fuels unfolds, Guilbeault and Energy and Natural Resources Minister Jonathan Wilkinson said to ensure competitiveness in global markets, the oil and gas industry must cut emissions.

Hot air

The Conservative Party’s statement called the cap “arbitrary,” and said it would increase exports from less ethical oil-producing nations than Canada. 

“Trudeau wants to suffocate Canada’s energy industry with an arbitrary emissions cap that will devastate Canada’s already broken economy, forcing our allies to buy dirty dictator oil from criminals like Vladimir Putin and the terrorist regime in Tehran,” the statement said.

Energy and Natural Resources Minister Jonathan Wilkinson told reporters Poilievre’s frequent attacks on climate policies makes clear he has “no plan” for the environment, and therefore has “no relevant plan for a prosperous economy of the future.”

“We can choose to lead by recognizing where the world is heading, and aggressively pursuing decarbonization and diversification initiatives to enable major areas of economic opportunity,” he said. “Or we can bury our heads in the sand… eroding our competitiveness, our long term prosperity, and our jobs.

“Anybody who says Canada is not a major contributor to climate change is simply either lying or they simply are very ill informed… We need to ensure that all major emitters, and that includes Canada, are doing their part to address what is an existential threat to the future of the human race,” he added. 

Guilbeault said the criticisms are “more hot air and disinformation on the part of the conservative movement in Canada.” In the face of “dramatic impacts” on Canadians and the economy due to climate change, Poilievre, Alberta Premier Danielle Smith and Sask. Premier Scott Moe are acting “stupid,” he said. 

“The Conservative Party and the conservative movement by and large in Canada, with few exceptions, continue to be climate denialists,” he said. 

With the risk of other opposition parties like the NDP and Bloc Québécois teaming up with the Conservatives to trigger an election, Guilbeault said he’s happy to work with other parties to strengthen the proposed oil and gas cap if they see room for improvement.

The NDP and Bloc have “said time and again that the oil sector should be doing its fair share,” Guilbeault said. “This is clearly an opportunity to make that a reality. 

“If the Bloc decides to league itself with Pierre Poilievre's Conservatives, they will have to explain to Quebecers why they prevented the largest polluters in the country from doing their fair share in the pursuit of the Bloc's own political gain. I'm hoping they won't do that.”

Bloc MP Monique Pauzé criticized the proposed regulations for being delayed, and said with another consultation period announced, the policy is “further and further” away. She also said the party would push the Trudeau government to have stronger regulations, but warned the Liberals can’t count on the Bloc’s unqualified support. 

“We're not there to keep [Trudeau] afloat or to put Poilievre [in],” she said. “We want something for Quebec.”

NDP Environment critic Laurel Collins said in a statement that the Liberals have “delayed this cap until the 11th hour and are giving Canada’s biggest polluters room to keep polluting with no limits.”

“New Democrats are calling on the government to close the loopholes in their emissions plan and to stop caving to the CEOs who are driving the climate crisis,” she said.

Guilbeault said one of the reasons the policy has taken years to develop is because of extensive consultations with the fossil fuel industry and experts to understand what emission reductions would be technically feasible by 2030 without affecting production levels.

Legal threats

Shortly after the announcement Monday, Alberta Premier Danielle Smith warned of a court challenge, claiming the cap would violate Canada’s constitution that gives provinces jurisdiction over natural resource development, and that it would lead the country “into economic and societal decline.”

“We will defend our province, our country and our Constitutional rights,” she said, adding the regulation is a “sucker-punch” to the economy that would lead to oil production cuts. 

Smith’s United Conservative Party voted over the weekend to ditch emission reduction targets and recognize carbon dioxide as “a foundational nutrient for all life on Earth,” a policy resolution the premier said she would adopt in spirit going forward.

Contrary to Smith’s warning of production cuts, federal modeling predicts oil and gas production will increase 16 per cent by 2030 with the cap in place —  a statistic federal ministers are using to defend the policy from expected court challenges. 

A 2023 Supreme Court of Canada ruling on the constitutionality of the Impact Assessment Act found the legislation was “largely unconstitutional” by treading too far into provincial jurisdiction, which has led to the Trudeau government walking a tightrope between setting new climate policies, and ensuring they won’t be too vulnerable to court challenges.

In a statement, West Coast Environmental Law staff lawyer Anna Johnston called the pollution cap a “no-brainer” and “logical next step” given the federal government has for decades regulated air and water pollution under the Canadian Environmental Protection Act. 

“This move to regulate climate pollution is squarely within the federal government’s jurisdiction, and it’s an essential piece of the policy puzzle when it comes to reducing emissions and meeting Canada’s climate targets,” she said. 

Other climate advocates applauded the proposal, noting that polling from earlier this year found 66 per cent of Canadians want to see Ottawa “move quickly” to put in place policies to curb oil and gas emissions, including 62 per cent of Albertans who support an emissions cap. 

“A year after the world agreed at COP28 to finally tackle the harms of the fossil fuel industry, Canada is delivering draft regulations to reduce oil and gas pollution at home,” said Caroline Brouillette, executive director of Climate Action Network Canada in a statement. “It is a long-awaited but historic first, and comes after years of advocacy from civil society to hold Canada’s biggest polluters accountable.

"But let’s not forget the reason why it is so delayed and far from oil and gas' fair share of the national climate effort: these billionaire companies and their political lackeys have spent millions in lobbying and disinformation campaigns,” she said. “Despite rising oil and gas pollution being directly responsible for disasters, deaths, the loss of homes, farms and cherished areas, these massive corporations have continuously sought to avoid any accountability whatsoever. 

As previously reported by Canada’s National Observer, the oil and gas industry lobbied aggressively as the emissions cap framework was being developed, racking up over 1,000 meetings with government officials last year. 

— With files from Natasha Bulowski